1933 Act File No. 2-10638
1940 Act File No. 811-5
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 73 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Post-Effective Amendment No. 73 [X]
LORD ABBETT AFFILIATED FUND, INC.
Exact Name of Registrant as Specified in Charter
767 FIFTH AVENUE, NEW YORK, N. Y. 10153-0203
Address of Principal Executive Office
REGISTRANT'S TELEPHONE NUMBER (212) 848-1800
Thomas F. Konop, Vice President & Assistant Secretary
767 FIFTH AVENUE, NEW YORK, N. Y. 10153
Name and Address of Agent for Service
It is proposed that this filing will become effective (check appropriate box)
X immediately on filing pursuant to paragraph (b) of Rule 485
on (date) pursuant to paragraph (b) of Rule 485
60 days after filing pursuant to paragraph (a) (1) of Rule 485
on (date) pursuant to paragraph (a) (1) of Rule 485
75 days after filing pursuant to paragraph (a) (2) of rule 485
on (date) pursuant to paragraph (a) (2) of rule 485
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
LORD ABBETT AFFILIATED FUND, INC.
FORM N-1A
Cross Reference Sheet
Post-Effective Amendment No. 73
Pursuant to Rule 481 (a)
Form N-1A Location In Prospectus or
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
1 Cover Page
2 Fee Table
3 (a) Financial Highlights; Performance
3 (b) N/A
3 (c) Performance
3 (d) N/A
4 (a) (i) Cover Page
4 (a) (ii) Investment Objective; How We Invest
4 (b) (c) How We Invest
5 (a) Our Management
5 (b) Our Management; Back Cover Page
5 (c) Our Management
5 (d) N/A
5 (e) Back Cover Page
5 (f) Our Management
5 (g) N/A
5 A Performance
6 (a) Cover Page
6 (b) (c) (d) N/A
6 (e) Cover Page
6 (f) (g) Dividends, Capital Gains
Distributions and Taxes
6 (h) N/A
7 (a) Back Cover Page
7 (b) (c) (d)
(e) (f) Purchases
8 Redemptions
9 N/A
10 Cover Page
11 Cover Page - Table of Contents
12 N/A
13 Investment Objective and Policies
14 Directors and Officers
15 (a) (b) N/A
15 (c) Directors and Officers
16 (a) (i) Investment Advisory and Other Services
16 (a) (ii) Directors and Officers
16 (a) (iii) Investment Advisory and Other Services
16 (b) Investment Advisory and Other Services
<PAGE>
Form N-1A Location In Prospectus or
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
16 (c) (d) (e)
(g) N/A
16 (f) Purchases, Redemptions; Investment Advisory
and Other Services and Shareholder Services
16 (h) Investment Advisory and Other Services
16 (i) N/A
17 (a) Portfolio Transactions
17 (b) N/A
17 (c)(d) Portfolio Transactions
17 (e) N/A
18 (a) Cover Page
18 (b) N/A
19 (a) (b) Purchases, Redemptions
and Shareholder Services
19 (c) N/A
20 Taxes
21 (a) Purchases, Redemptions
and Shareholder Services
21 (b) (c) N/A
22 (a) N/A
22 (b) Past Performance
23 Financial Statements
This Prospectus sets forth concisely the information about Lord Abbett
Affiliated Fund, Inc. ("we" or the "Fund") that you should know before
investing. Please read this Prospectus before investing and retain it for future
reference.
The Fund has five classes of shares. This Prospectus offers four of those
classes designated Class A, B, C and P shares which provide investors with
different purchase options. See "Purchases" for a description of these choices.
The investment objective is long-term growth of capital and income without
excessive fluctuations in market value. There can be no assurance that this
objective will be achieved.
The Statement of Additional Information dated March 1, 1998 has been filed with
the Securities and Exchange Commission and is incorporated by reference into
this Prospectus. You may obtain it, without charge, by writing to the Fund or by
calling 800-874-3733. Ask for "Part B of the Prospectus -- the Statement of
Additional Information".
Shaded terms are defined in the Glossary of Terms.
Mutual Fund shares are not deposits or obligations of, or guaranteed or endorsed
by, any bank. Shares are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency. An investment in
the Fund involves risks, including the possible loss of principal.
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
LORD ABBETT
AFFILIATED FUND
PROSPECTUS
March 1, 1998
TABLE OF CONTENTS PAGE
How We Invest 2
Investor Expenses 2
Risk Factors 2
Portfolio Management 2
Financial Highlights 3
Purchases 4
Opening Your Account 6
Shareholder Services 6
Redemptions 7
Dividends and Capital Gains 7
Our Management 8
Fund Performance 8
Investment Policies, Risks and Limits 8
Sales Compensation 9
Glossary of Terms 10
<PAGE>
HOW WE INVEST
Normally we invest in the common stocks of large, seasoned companies in sound
financial condition (including securities convertible into common stocks), which
we expect to perform above average with respect to earnings and price
appreciation.
We believe that investors purchase and redeem our shares to meet long-term
financial objectives rather than to take advantage of price fluctuations. If so,
their needs will be best served by an investment seeking capital appreciation
with less fluctuations in market value than the Standard & Poor's 500 Index. For
this reason, we try to keep our assets invested in securities which are selling
at reasonable prices and, therefore, we are willing to forego some opportunities
for gains when, in our judgment, they carry excessive risk.
See "Investment Policies, Risks and Limits".
RISK FACTORS
The value of your investment will fluctuate in response to stock market
movements. The Fund employs other investment practices such as investments in
foreign securities and other securities, that could adversely affect
performance. Before you invest, please read "Investment Policies, Risks and
Limits".
PORTFOLIO MANAGEMENT
W. Thomas Hudson Jr., Partner of Lord, Abbett & Co. ("Lord Abbett") and
Executive Vice President and portfolio manager of the Fund is primarily
responsible for the day-to-day management of the Fund. Mr. Hudson has been with
Lord Abbett since 1982 and has over 32 years of investment experience. Mr.
Hudson is assisted by, and may delegate management duties to, other Lord Abbett
employees who may be Fund officers.
Investor Expenses
The expenses shown below are based on estimated expenses for the current fiscal
year. Future expenses may be different than those shown.
Class A Class B Class C Class P
Shareholder Transaction Expenses
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% None None None
Deferred Sales Charge(1)
(See "Purchases") None 5.00% 1.00% None
Annual Fund Operating Expenses (as a % of average net assets)
Management Fees 0.32% 0.32% 0.32% 0.32%
(See "Our Management")
12b-1 Fees(2) 0.23% 1.00% 1.00% 0.45%
Other Expenses 0.10% 0.10% 0.10% 0.10%
(See "Our Management")
Total Operating Expenses 0.65% 1.42% 1.42% 0.87%
EXAMPLE
Assume an average annual return of 5% and no change in the level of expenses.
For a $1,000 investment with all dividends and distributions reinvested, you
would have paid the following total expenses assuming you sold your shares at
the end of each time period indicated.
Share Class 1 year 3 years 5 years 10 years
Class A shares $64 $77 $92 $134
Class B shares(3) $64 $75 $98 $149
Class C shares $24 $45 $78 $170
Class P shares $ 9 $28 $48 $107
You would pay the following expenses on the same investment, assuming you kept
your shares:
Class A shares $64 $77 $92 $134
Class B shares(3) $14 $45 $78 $149
Class C shares $14 $45 $78 $170
Class P Shares $9 $28 $48 $107
This example is for comparison and is not a representation of the Fund's actual
expenses and returns, either past or present.
(1)See "Purchases" for a description of sales charges, the Contingent Deferred
Sales Charge ("CDSC") payable on certain redemptions and separate Rule 12b-1
plans applicable to each class of shares.
(2)Because of the 12b-1 fee, long-term shareholders may indirectly pay more than
the equivalent of the maximum permitted front-end sales charge.
(3)Class B shares will automatically convert to Class A shares on the eighth
anniversary of your original purchase of Class B shares.
<PAGE>
FINANCIAL HIGHLIGHTS The following table has been audited by Deloitte & Touche
LLP, independent accountants, in connection with their annual audit of the
Fund's Financial Statements, whose report may be obtained on request. Call
800-821-5129 and ask for the Fund's 1997 annual report.
<TABLE>
<CAPTION>
Per Class A Share Operating Year Ended October 31,
Performance: 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $13.02 $11.98 $11.03 $11.26 $10.55 $10.29 $8.91 $10.43 $9.64 $10.44
Income from investment operations
Net investment income .30 .30 .32 .31 .31 .38 .40 .44 .46 .46
Net realized and unrealized
Total from investment operations 3.15 2.53 2.02 .69 1.74 .99 2.32 (.72) 1.62 1.03
Distributions
Dividends from net investment income (.30) (.30) (.30) (.32) (.35) (.40) (.41) (.44) (.48) (.49)
Distributions from net realized gain (1.03) (1.19) (.77) (.60) (.68) (.33) (.53) (.36) (.35) (1.34)
Net asset value, end of year $14.84 $13.02 $11.98 $11.03 $11.26 $10.55 $10.29 $8.91 $10.43 $9.64
Total Return(a) 25.80% 23.23% 20.46% 6.66% 17.76% 10.36% 28.00% (7.57)% 18.04% 12.19%
Ratios to Average Net Assets:
Expenses(d) 0.65% 0.66% 0.63% 0.63% 0.63% 0.60% 0.58% 0.50% 0.42% 0.43%
Net Investment Income 2.15% 2.61% 2.90% 2.91% 2.95% 3.73% 4.22% 4.37% 4.64% 5.00%
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
Per Class Share Operating Year Ended August 1, 1996(b) to Year Ended July 15, 1996(b) to
Performance October 31, 1997 October 31, 1996 October 31, 1997 October 31, 1996
<S> <C> <C> <C> <C>
Net asset value, beginning of period $13.03 $11.88 $13.02 $11.88
Income from investment operations
Net investment income .20 .060 .22 .062
Net realized and unrealized
gain (loss) on securities 2.84 1.142 2.83 1.130
Total from investment operations 3.04 1.202 3.05 1.192
Distributions
Dividends from net investment income (.20) (.052) (.20) (.052)
Distribution From Net Realized Gain (1.03) -- (1.03) --
Net asset value, end of period $14.84 $13.03 $14.84 $13.02
Total Return(a) 24.78% 10.15%(c) 24.88% 10.07%(c)
Ratios to Average Net Assets:
Expenses (d) 1.42% 0.34%(c) 1.34% 0.33%(c)
Net investment income 1.19% 0.27%(c) 1.28% 0.25%(c)
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
Supplemental Data For All Classes: 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Assets, end of year (000) $7,697,754 $6,100,665 $4,964,525 $4,229,586 $4,174,033
Portfolio turnover rate 46.41% 47.06% 53.84% 51.48% 45.15%
Average commissions per share
paid on equity transactions $0.062 $0.064 $0.063 -- --
Year Ended October 31,
Supplemental Data For All Classes: 1992 1991 1990 1989 1988
Net Assets, end of year (000) $3,680,332 $3,565,230 $3,032,954 $3,550,414 $3,339,427
Portfolio turnover rate 42.00% 56.38% 31.78% 34.08% 26.95%
Average commissions per share
paid on equity transactions --- --- --- --- ---
<FN>
(a)Total return does not consider the effects of front-end sales or contingent
deferred sales charges.
(b)Commencement of offering Class shares.
(c)Not annualized.
(d)The ratio for 1997 includes expenses paid through an expense offset
arrangement.
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
PURCHASES
This Prospectus offers four classes of shares, Class A, B, C and P. These
classes of shares represent investments in the same portfolio of securities but
are subject to different expenses. Our shares are continuously offered based on
the per share net asset value ("NAV") next computed after we accept your
purchase order submitted in proper form, plus a front-end sales charge as
described below, in the case of the Class A shares and without a front-end sales
charge, in the case of the Class B, C and P shares as described below. Investors
should read this section carefully to determine which class of shares represents
the best investment option for their particular situation.
CLASS A
- - Normally offered with a front-end sales charge.
- - Lower annual expenses than Class B and Class C shares.
CLASS B
- - No front-end sales charge.
- - Higher annual expenses than Class A shares.
- - A contingent deferred sales charge is applied to shares sold prior to the
sixth anniversary of purchase.
- - Automatically convert to Class A shares after eight years.
CLASS C
- - No front-end sales charge.
- - Higher annual expenses than Class A shares.
- - A contingent deferred sales charge is applied to shares sold prior to the
first anniversary of purchase.
Class P shares, available to a limited number of shareholders, are described on
the next page.
It may not be suitable for you to place a purchase order for Class B shares of
$500,000 or more or a purchase order for Class C shares of $1,000,000 or more.
You should discuss pricing options with your investment professional.
For more information, see "Alternative Sales Arrangements" in the Statement of
Additional Information.
CLASS A SHARES. Front-end sales charges are as follows:
To Compute
As a % of As a % of Offering Price
Offering Your Divide
Your Investment Price Investment NAV by
Less than $50,000 5.75% 6.10% .9425
$50,000 to $99,999 4.75% 4.99% .9525
$100,000 to $249,999 3.75% 3.90% .9625
$250,000 to $499,999 2.75% 2.83% .9725
$500,000 to $999,999 2.00% 2.04% .9800
$1,000,000 over No Sales Charge 1.0000
REDUCING YOUR CLASS A FRONT-END SALES CHARGES. There are several ways you can
qualify for a lower sales charge when purchasing Class A shares if you inform
the Fund that you are eligible at the time of purchase.
- - RIGHTS OF ACCUMULATION -- a Purchaser can add the share value of any Eligible
Fund already owned to the amount of the next purchase of Class A shares for
purposes of calculating the sales charge.
- - STATEMENT OF INTENTION -- a Purchaser can purchase Class A shares of
any Eligible Fund over a 13-month period and receive the same sales charge as if
all shares had been purchased at once. Shares purchased through reinvestment of
distributions are not included.
For more information on eligibility for these privileges, read the applicable
sections in the attached application.
CLASS A SHARE PURCHASES WITHOUT A FRONT-END SALES CHARGE. Class A shares may be
purchased without a front-end sales charge under the following circumstances.
1 Purchases of $1 million or more. *
2 Purchases by Retirement Plans with at least 100 eligible
employees. *
3 Purchases under a Special Retirement Wrap Program. *
4 Purchases made with dividends and distributions on Class A shares of another
Eligible Fund.
5 Purchases representing repayment under the loan feature of the Lord
Abbett-sponsored prototype 403(b) plan for Class A shares.
<PAGE>
6 Employees of any consenting securities dealer having a sales agreement with
Lord Abbett Distributor.
7 Purchases under a Mutual Fund Wrap-Fee Program.
8 Lord Abbett Consultants/Advisers.
9 Employees of our shareholder servicing agent.
10 Employees of any national securities trade organization to which Lord Abbett
belongs.
11 Employees of Lord Abbett and our Directors/Trustees (active or retired),
their spouses, including surviving spouses, and other family members.
12 Trustees or custodians of any pension or profit sharing plan, or payroll
deduction IRA for the persons mentioned in 6, 9, 10 and 11 above.
* May be subject to a CDSC.
CONTINGENT DEFERRED SALES CHARGES ("CDSC"). The CDSC, regardless of class, is
not charged on shares acquired through reinvestment of dividends or capital
gains distributions and is charged on the original purchase cost or the current
market value of the shares being sold, whichever is lower.
CLASS A SHARE CDSC. If you buy Class A shares under one of the starred (P. )
categories listed above subject to a dealer's concession of up to 1% and you
redeem any of the Class A shares within 24 months after the month in which you
initially purchased such shares, the Fund normally will collect a CDSC of 1%.
The Class A share CDSC generally will be waived under the following
circumstances.
- - Benefit payments such as Retirement Plan loans, hardship withdrawals, death,
disability, retirement, separation from service or any excess distribution under
Retirement Plans (documentation may be required).
- - Redemptions continuing as investments in another fund participating in a
Special Retirement Wrap Program.
CLASS B SHARE CDSC. The CDSC for Class B shares normally applies if you redeem
your shares before the sixth anniversary of their initial purchase. The CDSC
varies depending on how long you own your shares according to the following
schedule.
Contingent Deferred
Anniversary(1) Sales Charge on
of the Day on Redemptions
Which the Purchase (As % of Amount
Order Was Accepted Subject to Charge)
On Before
1st 5.0%
1st 2nd 4.0%
2nd 3rd 3.0%
3rd 4th 3.0%
4th 5th 2.0%
5th 6th 1.0%
on or after the None
6th anniversary(2)
(1)Anniversary is the 365th day subsequent to a purchase or a prior anniversary.
(2)Class B shares will automatically convert to Class A shares on the eighth
anniversary of the purchase of Class B shares.
The Class B share CDSC generally will be waived under the following
circumstances.
- - Benefit payments such as Retirement Plan loans, hardship withdrawals, death,
disability, retirement, separation from service or any excess distribution under
Retirement Plans.
- - Eligible Mandatory Distributions under 403(b) plans and individual retirement
accounts.
- - Death of the shareholder (natural person).
- - On redemptions of shares in connection with Div-Move and Systematic Withdrawal
Plans (up to 12% per year).
See "Systematic Withdrawal Plan" for more information on CDSCs with respect to
Class B shares.
CLASS C SHARE CDSC. The 1% CDSC for Class C shares normally applies if you
redeem your shares before the first anniversary of your original purchase.
APPLICATION OF CDSC TO A REDEMPTION. To determine if a CDSC applies to a
redemption, the Fund redeems shares in the following order.
1 Shares acquired by reinvestment of dividends and capital gains.
2 Shares held for six years or more (Class B) or one year or more (Class C).
3 Shares held the longest before the sixth anniversary of their purchase
(Class B) or before the first anniversary of their purchase (Class C).
CLASS P SHARES.
- - No front-end sales charge.
- - Lower annual expenses than Class B and Class C shares.
- - No CDSC.
<PAGE>
Class P shares are available to a limited number of investors. Class P shares
are currently sold at net asset value to the trustees of, or employer-sponsors
with respect to, pension or retirement plans with at least 100 eligible
employees (such as a plan under Section 401(a), 401(k) or 457(b) of the Internal
Revenue Code) which engage an investment professional providing or participating
in an agreement to provide, certain recordkeeping, administrative and/or
sub-transfer agency services to the Fund on behalf of the Class P shareholders.
Purchases and redemption of Class P shares will be effected at net asset value
by trustees, custodians or employers on behalf of plan participants.
Opening Your Account
MINIMUM INITIAL INVESTMENT
- - Regular account $250
- - Individual Retirement Accounts, 403(b)
and employer-sponsored retirement plans
under the Internal Revenue Code $250
- - Invest-A-Matic and Div-Move $250 initial
$50 subsequent minimum
For Retirement Plans and Mutual Fund Wrap Programs, there is no minimum
investment required, regardless of share class.
You may purchase shares through any independent securities dealer who has a
sales agreement with Lord Abbett Distributor or you can fill out the attached
application and send it to the Fund at the address stated below. You should read
this Prospectus carefully before placing your order to assure your order is in
proper form.
LORD ABBETT AFFILIATED FUND, INC.
P.O. Box 419100
Kansas City, MO 64141
PROPER FORM. To be in proper form an order submitted directly to the Fund must
contain (1) a completed Application Form or information and documentation
required supplementally by the Fund, and (2) payment must be credited in U.S.
dollars to our custodian bank's account. For more information regarding proper
form of a purchase order, call the Fund at 800-821-5129.
IMPORTANT INFORMATION. If you fail to provide a correct taxpayer identification
number or to make certain required certifications, you may be subject to a $50
penalty under the Internal Revenue Code and we may be required to withhold a
portion (31%) of any redemption proceeds and of any dividend or distribution on
your account.
BY EXCHANGE. Telephone the Fund at 1-800-821-5129 to request an exchange from
any eligible Lord Abbett-sponsored fund.
We reserve the right to withdraw all or any part of the offering made by this
Prospectus or to reject any purchase order. We also reserve the right to waive,
increase or establish minimum investment requirements. All purchase orders are
subject to our acceptance and are not binding until confirmed or accepted in
writing.
SHAREHOLDER SERVICES
Telephone Exchanges. You or your investment professional, with proper
identification, can instruct the Fund by telephone to exchange shares of any
class for the same class of any Eligible Fund. Instructions must be received by
the Fund in Kansas City by calling 1-800-821-5129 prior to the close of the New
York Stock Exchange ("NYSE") to obtain an Eligible Fund's NAV per class share on
that day. Exchanges will be treated as a sale for federal tax purposes.
For your protection, telephone requests for exchanges are recorded. We will take
measures to verify the identity of the caller, such as asking for your name,
account number, social security or taxpayer identification number and other
relevant information. The Fund will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine.
Expedited exchanges by telephone may be difficult to implement in times of
drastic economic or market change. The exchange privilege should not be used to
take advantage of short-term swings in the market. The Fund reserves the right
to limit or terminate this privilege for any shareholder making frequent
exchanges and may revoke the privilege for all shareholders upon 60 days' prior
written notice. You have this privilege unless you refuse it in writing.
You should read the prospectus of the other Lord Abbett-sponsored fund(s)
selected before making an exchange.
INVEST-A-MATIC. You can make fixed, periodic investments ($250 initial and $50
subsequent minimum) into the Fund by means of automatic money transfers from
your bank checking account. See the attached Application Form for instructions.
DIV-MOVE. You can invest the dividends paid on your account ($50 minimum) into
another account, within the same class, in any Eligible Fund.
<PAGE>
The account must be either your account, a joint spousal account, or a custodial
account for your minor child.
SYSTEMATIC WITHDRAWAL PLAN ("SWP"). You can make periodic cash withdrawals from
your account which are automatically paid to you in fixed or variable amounts.
To participate, the value of your shares must be at least $10,000, except for
retirement plans for which there is no minimum.
With respect to Class B shares, the CDSC will be waived on redemptions of up to
12% of the current net asset value of your account at the time of your SWP
request. For Class B share redemptions over 12% per year, the CDSC will apply to
the entire redemption. Please contact the Fund for assistance in minimizing the
CDSC in this situation.
Redemption proceeds due to a SWP for Class B (up to 12% per year) and Class C
shares, will be redeemed in the order described under "Redemptions".
LORD ABBETT'S PROTOTYPE RETIREMENT PLANS. The Lord Abbett Family of Funds offers
a range of qualified retirement plans, including IRAs, SIMPLE IRAs, Simplified
Employee Pension Plans, 403(b) and pension and profit-sharing plans, including
401(k) plans. To find out more about these plans, call the Fund at
1-800-842-0828.
ACCOUNT CHANGES. For any changes you need to make to your account, consult your
financial representative or call the Fund at 1-800-821-5129.
HOUSEHOLDING. Generally, shareholders with the same last name and address will
receive a single copy of an annual or semi-annual report, unless additional
reports are specifically requested in writing to the Fund.
REINVESTMENT PRIVILEGE. If you sell shares of the Fund, you have the one time
right to reinvest some or all of the proceeds in the same class of any Eligible
Fund within 60 days without a sales charge. If you paid a CDSC when you sold
your shares, you will be credited with the amount of the CDSC. All accounts
involved must have the same registration.
PRICING SHARES. The net asset value ("NAV") per share for each class of shares
is calculated each business day at the close of regular trading on the New York
Stock Exchange ("NYSE") by dividing a class's net assets by the number of shares
outstanding. The Fund is open on those business days when the NYSE is open.
Purchases and redemptions are executed at the next NAV to be calculated after
your request is accepted.
REDEMPTIONS
BY BROKER. Call your broker or investment professional for directions on how to
redeem your shares.
BY TELEPHONE. To obtain the proceeds of an expedited redemption of $50,000 or
less, you or your representative can call the Fund at 1-800-821-5129. The Fund
will employ the procedures described in telephone exchanges to confirm that the
instructions received are genuine.
The Fund will not be liable for following instructions communicated by telephone
that it reasonably believes to be genuine.
BY MAIL. Submit a written redemption request indicating your Fund's name, your
share class, your account number, the name(s) in which the account is registered
and the dollar value or number of shares you wish to sell.
Include all necessary signatures. If the signer has any Legal Capacity, the
signature and capacity must be guaranteed by an Eligible Guarantor. Certain
other legal documentation may be required. For more information regarding proper
documentation call 1-800-821-5129.
We will verify that the shares being redeemed were purchased at least 15 days
earlier. Your account balance must be sufficient to cover the amount being
redeemed or your redemption order will not be processed.
Normally a check will be mailed to the name(s) and addresses in which the
account is registered, or otherwise according to your instruction within one
business day after receipt of your redemption request. The Fund reserves the
right to make payment within three business days.
To determine if a CDSC applies to a redemption, see "Contingent Deferred Sales
Charges" above.
<PAGE>
DIVIDENDS AND CAPITAL GAINS
DIVIDENDS. The Fund distributes most or all of its net earnings in the form of
dividends which are expected to be paid to shareholders in February, May, August
and November. A supplemental dividend also may be paid in December.
CAPITAL GAINS DISTRIBUTIONS. Any capital gains distribution is expected to be
made in November and may be taken in cash or reinvested. Distributions by the
Fund of any net long-term capital gains will be taxable to a shareholder as
long-term capital gains regardless of how long the shareholder has held the
shares. Under recently enacted legislation, the maximum tax rate on long-term
capital gains for a U.S. individual, estate or trust is reduced to 20% for
distributions derived from the sale of assets held by the Fund for more than 18
months. (If the taxpayer is in the 15% tax bracket, the rate is 10%.) For
distributions derived from the sale of assets held by the Fund between 12 and 18
months, the tax rate remains at 28% (15% if the taxpayer is in the 15% tax
bracket).
DIVIDENDS/CAPITAL GAINS RECEIPT OR REINVESTMENT. If you elect to receive
dividends or capital gains in cash, a check will be mailed to you as soon as
possible after the reinvestment date. If you arrange for direct deposit, your
payment will be electronically transmitted to your bank account within one day
after the payable date. Most investors reinvest their dividends and capital
gains. If you choose this option, or if you do not indicate any choice, your
dividends and capital gains distributions will be automatically reinvested in
additional shares.
TAXES. The Fund pays no federal income tax on the earnings it distributes to
shareholders. Consequently, dividends you receive from the Fund, whether
reinvested or taken in cash, are generally considered taxable. Dividends
declared in December of any year will be treated for federal income tax purposes
as having been received by shareholders in that year if they are paid before
February 1 of the following year.
Each January the Fund will mail to you, if applicable, a Form 1099 tax
information statement detailing your dividends and capital gain distributions.
You should consult you tax adviser concerning applicable state and local taxes.
For more information about the tax consequences from dividends and
distributions, see the Statement of Additional Information.
OUR MANAGEMENT
The Fund is supervised by a Board of Directors, an independent body which has
ultimate responsibility for the Fund's activities. The Board has retained Lord
Abbett as investment manager pursuant to a Management Agreement. Lord Abbett has
been an investment manager for over 68 years and currently manages about $25
billion in a family of mutual funds and other advisory accounts. Lord Abbett
provides similar services to twelve other funds having various investment
objectives and also advises other investment clients. For more information about
the services Lord Abbett provides to the Fund, see the Statement of Additional
Information.
The Fund pays Lord Abbett a monthly fee based on average daily net assets for
each month. For the fiscal year ended October 31, 1997, the fee paid to Lord
Abbett was at an annual rate of .32 of 1%. In addition, the Fund pays all
expenses not expressly assumed by Lord Abbett.
THE FUND. The Fund is a diversified open-end management investment company
established in 1934. Its Class A, B, C and P shares have equal rights as to
voting, dividends, assets and liquidation except for differences resulting from
certain class-specific expenses.
FUND PERFORMANCE
During the past fiscal year, the stock market and the Fund enjoyed returns above
historical averages due to an environment of solid economic growth, low
inflation and strong corporate profit gains. Throughout most of the period, the
portfolio has been evenly diversified, but with a moderate overweighting in
financial stocks. Furthermore, we have shifted our focus within this group of
stocks towards insurance companies, which are benefiting from industry-wide
consolidation and cost-cutting efforts.
See the performance chart on the second to last page of this Prospectus.
<PAGE>
INVESTMENT POLICIES, RISKS AND LIMITS
The Fund is permitted to utilize, within limits established by the Board of
Directors, the following investment policies in an effort to enhance the Fund's
performance. These policies have risks associated with them. However, the Fund
follows certain practices that may reduce these risks. To the extent the Fund
utilizes some of these policies, its overall performance may be positively or
negatively affected.
SECURITIES LENDING: The lending of securities to financial institutions which
provide continuous collateral equal to the market value of the securities
loaned.
RISK: Delay in recovery of collateral and loss should the borrower of the
security fail financially.
LIMIT: Loans, in the aggregate, may not exceed 30% of the Fund's total assets.
SELLING COVERED CALL OPTIONS: A covered call option on stock gives the buyer of
the option, upon payment of a premium to the seller (writer) of the option, the
right to call upon the writer to deliver a specified number of shares of a stock
owned by the writer on or before a fixed date at a predetermined price.
RISK: Although the Fund receives income based on receipt of the premium, it
gives up participation in the appreciation of the stock above the predetermined
price if it is called away by the buyer.
LIMIT: The Fund may write covered call options on securities having an aggregate
market value not to exceed 10% of the Fund's gross assets.
HIGH YIELD DEBT SECURITIES: High yield debt securities or "junk bonds" are rated
BB/Ba or lower and typically pay a higher yield than investment-grade debt
securities.
RISK: The issuer may default or not be able to fulfill the financial obligation
or the market price may decline significantly in periods of economic difficulty.
LIMIT: The Fund will not invest more than 5% of its assets at the time of
investment in high-yield debt securities.
FOREIGN SECURITIES: Foreign securities are securities primarily traded in
countries outside the United States.
RISK: These securities are not subject to the same degree of regulation and may
be more volatile and less liquid than securities traded in major U.S. markets.
Other considerations include political and social instability, expropriations,
higher transaction costs, currency fluctuations, nondeductable withholding taxes
and different settlement practices.
LIMIT: The Fund may invest up to 10% of its assets at the time of investment in
foreign securities.
ILLIQUID SECURITIES: Securities not traded on the open market. May include
illiquid Rule 144A securities.
RISK: Certain securities may be difficult or impossible to sell at the time and
price the seller would like.
LIMIT: The Fund may invest up to 15% of its assets in illiquid securities.
Securities determined by the Board of Directors to be liquid are not subject to
this limitation.
We will not change our investment objective or our investment restrictions
without shareholder approval. If we determine that our objective can best be
achieved by a substantive change in investment policy, which may be changed
without shareholder approval, we may make such change by disclosing it in our
prospectus.
For more information about investment policies, restrictions and risk factors,
see the Statement of Additional Information.
SALES COMPENSATION
As part of its plan for distributing shares, the Fund, along with Lord Abbett
Distributor, pays compensation to Authorized Institutions that sell the Fund's
shares. These firms typically pass along a portion of this compensation to your
financial representative.
Compensation payments originate from two sources: sales charges and 12b-1 fees
that are paid out of the Fund's assets ("12b-1"refers to the federal securities
regulation authorizing annual fees of this type). The 12b-1 fee rates vary by
share class, according to the Rule 12b-1 plan adopted by the Fund for each share
class. The sales charges and 12b-1 fees paid by investors are detailed in the
class-by-class information under "Investor Expenses" and "Purchases". The
portion of these expenses that are paid as compensation to Authorized
Institutions, such as your dealer, are shown in the chart on the last page of
this Prospectus. Sometimes compensation is not paid where tracking data is not
available for certain accounts and where the Authorized Institution waives part
of the compensation as with an account under a Mutual Fund Wrap-Fee Program.
Rule 12b-1 distribution fees may be used to pay for sales compensation to
Authorized Institutions, for any activity which is primarily intended to result
in the sale of shares and, for Class B shares, the financing of sales
commissions.
<PAGE>
First Year Compensation. Whenever you make an investment in the Fund, the
Authorized Institution receives compensation as described in the chart on the
last page of this Prospectus.
Annual Compensation After First Year. Beginning with the second year after an
investment is made, the Authorized Institution receives annual compensation as
described in the chart on the last page of this Prospectus.
Additional Concessions may be paid to Authorized Institutions from time to time.
GLOSSARY OF TERMS
ADDITIONAL CONCESSIONS. A supplemental annual distribution fee equal to 0.10% of
the average daily net asset value of the Class A shares is available to
Authorized Institutions which have a program for the promotion and retention of
such shares satisfying Lord Abbett Distributor. Class A shares held pursuant to
a satisfactory program would, for example, (i) constitute a significant
percentage of the Fund's net assets, (ii) be held for a substantial length of
time and/or (iii) have a lower than average redemption rate.
LORD ABBETT DISTRIBUTOR may, for specified periods, allow dealers to retain the
full sales charge for sales of shares or may pay an additional concession to a
dealer who sells a minimum dollar amount of our shares and/or shares of other
Lord Abbett-sponsored funds. In some instances, such additional concessions will
be offered only to certain dealers expected to sell significant amounts of
shares. Lord Abbett Distributor may, from time to time, implement promotions
under which Lord Abbett Distributor will pay a fee to dealers with respect to
certain purchases not involving imposition of a sales charge. Additional
payments may be paid from Lord Abbett Distributor's own resources and will be
made in the form of cash or, if permitted, non-cash payments. The non-cash
payments will include business seminars at Lord Abbett's headquarters or other
locations, including meals and entertainment, or the receipt of merchandise. The
cash payments may include payment of various business expenses of the dealer.
In selecting dealers to execute portfolio transactions for the Fund's portfolio,
if two or more dealers are considered capable of obtaining best execution, we
may prefer the dealer who has sold our shares and/or shares of other Lord
Abbett-sponsored funds.
AUTHORIZED INSTITUTIONS. Institutions and persons permitted by law to receive
service and/or distribution fees under a Rule 12b-1 plan are "authorized
institutions".
ELIGIBLE FUND. (a) Any Lord Abbett-sponsored fund except certain tax-free,
single-state series where the exchanging shareholder is a resident of a state in
which such series is not offered for sale; Lord Abbett Equity Fund; Lord Abbett
Series Fund; Lord Abbett Research Fund -- Mid-Cap Series; Lord Abbett U.S.
Government Securities Money Market Fund ("GSMMF") (except for holdings in GSMMF
which are attributable to any shares exchanged from the Lord Abbett family of
funds). (b) Any Authorized Institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain omnibus account and other criteria.
ELIGIBLE GUARANTOR. Any broker or bank that is a member of the medallion stamp
program. Most major securities firms and banks are members of this program. A
NOTARY PUBLIC IS NOT AN ELIGIBLE GUARANTOR.
ELIGIBLE MANDATORY DISTRIBUTIONS. If Class B shares represent a part of an
individual's total IRA or 403(b) investment, the CDSC waiver is available only
for that portion of a mandatory distribution which bears the same relation to
the entire mandatory distribution as the B share investment bears to the total
investment.
EMPLOYEES OF LORD ABBETT/FUND DIRECTORS (TRUSTEES). The terms "directors,"
"trustees" (of a Fund) and "employees" (of Lord Abbett) include a director's
(trustee's) or employee's spouse (including the surviving spouse of a deceased
director (trustee) or employee. The terms "directors," "trustees" and "employees
of Lord Abbett" also include other family members and retired directors
(trustees) and employees.
<PAGE>
LEGAL CAPACITY. With respect to a redemption request, if (for example) the
request is on behalf of the estate of a deceased shareholder, John W. Doe, by a
person (Robert A. Doe) who has the legal capacity to act for the estate of the
deceased shareholder because he is the executor of the estate, then the request
must be executed as follows: Robert A. Doe, Executor of the Estate of John W.
Doe.
Similarly, if (for example) the redemption request is on behalf of the ABC
Corporation by a person (Mary B. Doe) that has the legal capacity to act on
behalf of this corporation, because she is the President of the corporation,
then the request must be executed as follows: ABC Corporation by Mary B. Doe,
President.
An acceptable form of guarantee would be as follows:
- - In the case of the estate -
Robert A. Doe, Executor
of the Estate of John W. Doe
[Date] Stamp
- - In the case of the corporation -
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date] Stamp
LORD ABBETT CONSULTANTS/ADVISERS. Consultants and advisers to Lord Abbett, Lord
Abbett Distributor or Lord Abbett-sponsored funds who consent to such purchase
if such persons provide services to Lord Abbett, Lord Abbett Distributor or such
funds on a continuing basis and are familiar with such fund.
LORD ABBETT DISTRIBUTOR LLC. Lord Abbett Distributor is the Fund's exclusive
selling agent. Lord Abbett Distributor is obligated to use its best efforts to
find purchasers for the shares of the Fund, and to make reasonable efforts to
sell Fund shares so long as, in Lord Abbett Distributor's judgment, a
substantial distribution can be obtained.
MUTUAL FUND WRAP-FEE PROGRAM. Certain unaffiliated authorized brokers, dealers,
registered investment advisers or other financial institutions who have entered
into an agreement with Lord Abbett Distributor in accordance with certain
standards approved by Lord Abbett Distributor, providing specifically for the
use of our shares in particular investment products made available for a fee to
clients of such brokers, dealers, registered investment advisers and other
financial institutions.
PURCHASER. The term "purchaser" includes: (i) an individual, (ii) an individual
and his or her spouse and children under the age of 21 and (iii) a trustee or
other fiduciary purchasing shares for a single trust estate or single fiduciary
account (including a pension, profit-sharing, or other employee benefit trust
qualified under Section 401 of the Internal Revenue Code -- more than one
qualified employee benefit trust of a single employer, including its
consolidated subsidiaries, may be considered a single trust, as may qualified
plans of multiple employers registered in the name of a single bank trustee as
one account), although more than one beneficiary is involved.
RETIREMENT PLANS. Employer-sponsored retirement plans under the Internal Revenue
Code.
SPECIAL RETIREMENT WRAP PROGRAM. A program sponsored by an authorized
institution showing one or more characteristics distinguishing it, in the
opinion of Lord Abbett Distributor from a mutual fund wrap fee program. Such
characteristics include, among other things, the fact that an authorized
institution does not charge its clients any fee of a consulting or advisory
nature that is economically equivalent to the distribution fee under Class A
12b-1 Plan and the fact that the program relates to participant-directed
Retirement Plans.
<PAGE>
TOTAL RETURN. "Total return" for the one-, five- and ten-year periods represents
the average annual compounded rate of return on an investment of $1,000 in the
Fund at the maximum public offering price. When total return is quoted for Class
A shares, it includes the payment of the maximum initial sales charge. When
total return is shown for Class B and Class C shares, it reflects the effect of
the applicable CDSC. Total return also may be presented for other periods or
based on investments at reduced sales charge levels or net asset value. Any
quotation of total return not reflecting the maximum sales charge (front-end,
level, or back-end) would be reduced if such sales charge were used. Quotations
of yield or total return for any period when an expense limitation is in effect
will be greater than if the limitation had not been in effect. See "Past
Performance" in the Statement of Additional Information for a more detailed
description.
YIELD. Each class of shares calculates its "yield" by dividing the annualized
net investment income per share on the portfolio during a 30-day period by the
maximum offering price on the last day of the period. The yield of each class
will differ because of the different expenses (including actual 12b-1 fees) of
each class of shares. The yield data represents a hypothetical investment return
on the portfolio, and does not measure investment return based on dividends
actually paid to shareholders. To show that return, a dividend distribution rate
may be calculated. Dividend distribution rate is calculated by dividing the
dividends of a class derived from net investment income during a stated period
by the maximum offering price on the last day of the period. Yields and dividend
distribution rate for Class A shares reflect the deduction of the maximum
initial sales charge, but may also be shown based on the Fund's net asset value
per share. Yields for Class B and Class C shares do not reflect the deduction of
the CDSC.
This Prospectus does not constitute an offering in any jurisdiction in which
such offer is not authorized or in which the person making such offer is not
qualified to do so or to anyone to whom it is unlawful to make such offer.
No person is authorized to give any information or to make any representations
not contained in this Prospectus or in supplemental sales material authorized by
the Fund and no person is entitled to rely upon any information or
representation not contained herein or therein.
Comparison of change in value of a $10,000 investment in Class A shares in the
Fund, assuming reinvestment of all dividends and distributions and the unmanaged
Standard & Poor's 500 Index.
The following chart is represented by a line graph.
Class A shares Class A shares Standard & Poor's
at Net Asset Value at Maximum Offer- 500 Index (2)
ing Price (1)
1987 10,000 9,422 10,000
1988 11,220 10,571 11,491
1989 13,243 12,478 14,511
1990 12,240 11,533 13,429
1991 15,668 14,763 17,921
1992 17,290 16,292 19,704
1993 20,361 19,185 22,618
1994 21,718 20,465 23,491
1995 26,168 24,651 29,694
1996 32,238 30,376 36,822
1997 40,554 38,212 48,642
Average Annual Total Return for Class A Shares(3)
1 year 5 Years 10 Years
18.60% 17.20% 14.35%
Average Annual Total Return for Class B Shares(4)
1 year LIFE
19.79% 24.83%
Average Annual Total Return for Class C Shares(5)
1 year LIFE
24.88% 28.98%
(1)Data reflects the deduction of the maximum initial sales charge of 5.75%
applicable to Class A shares.
(2)Performance numbers for the unmanaged Standard & Poor's 500 Index do not
reflect transaction costs or management fees. An investor cannot invest directly
in the Standard & Poor's 500 Index.
(3)Total return is the percent change in value, after deduction of the maximum
initial sales charge of 5.75% applicable to Class A shares, with all dividends
and distributions reinvested for the periods shown ending October 31, 1997 using
the SEC-required uniform method to compute such return.
(4)The Class B shares were first offered on 8/1/96. Performance reflects the
deduction of a 4% CDSC.
(5)The Class C shares were first offered on 8/1/96. Performance is at net asset
value.
<PAGE>
FIRST YEAR COMPENSATION
Class A investments
<TABLE>
<CAPTION>
Front-end
sales charge Dealer's
paid by investors concession Service fee(1) Total compensation(2)
(% of offering price) (% of offering price) (%of net investment) (% of offering price)
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 5.00% 0.25% 5.24%
$50,000 - $99,999 4.75% 4.00% 0.25% 4.24%
$100,000 - $249,999 3.75% 3.25% 0.25% 3.49%
$250,000 - $499,999 2.75% 2.25% 0.25% 2.49%
$500,000 - $999,999 2.00% 1.75% 0.25% 2.00%
$1 million or more(3) or
Retirement Plan - 100 or more eligible employees(3) or
Special Retirement Wrap Program(3)
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
Next $5 million above that no front-end sales charge 0.55% 0.25% 0.80%
Next $40 million above that no front-end sales charge 0.250% 0.25% 0.50%
Over $50 million no front-end sales charge 0.025% 0.25% 0.275%
Class B investments Paid at time of sale (% of net asset value)
All amounts no front-end sales charge 3.75% 0.25% 4.00%
Class C investments
All amounts no front-end sales charge 0.75% 0.25% 1.00%
Class P investments Percentage of average net assets
All amounts no front-end sales charge 0.25% 0.20% 0.45%
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments
All amounts no front-end sales charge none 0.25% 0.25%
Class B investments Percentage of average net assets (4)
All amounts no front-end sales charge none 0.25% 0.25%
Class C investments
All amounts no front-end sales charge 0.75% 0.25% 1.00%
Class P investments
All amounts no front-end sales charge 0.25% 0.20% 0.45%
<FN>
(1) The service fee for Class A and P shares is paid quarterly and for Class A
shares may not exceed 0.15% if sold prior to June 1, 1990. The first year's
service fee on Class B and C shares is paid at the time of sale.
(2) Reallowance/concession percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition. Additional
Concessions may be paid to Authorized Institutions from time to time.
(3) Concessions are paid at the time of sale on all Class A shares sold during
any 12-month period starting from the day of the first net asset value sale.
With respect to(a) Class A share purchases at $1million or more, sales
qualifying at such level under rights of accumulation and statement of intention
privileges are included and(b) for Special Retirement Wrap Programs, only new
sales are eligible and exchanges into the Fund are excluded.
(4) With respect to Class B, C and P shares, 0.25%, 1.00% and 0.45%,
respectively, of the average annual net asset value of such shares outstanding
during the quarter (including distribution reinvestment shares after the first
anniversary of their issuance) is paid to Authorized Institutions. These fees
are paid quarterly in arrears.
CDSC revenues collected by Lord Abbett Funds may be used to fund
commission payments when there is no initial sales charge.
</FN>
</TABLE>
<PAGE>
INVESTMENT MANAGER AND UNDERWRITER
Lord, Abbett & Co. and Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York 10286
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
United Missouri Bank of Kansas City, N.A.
Tenth and Grand
Kansas City, Missouri 64141
SHAREHOLDER SERVICING AGENT
DST Systems, Inc.
P.O. Box 419100
Kansas City, Missouri 64141
800-821-5129
AUDITORS
Deloitte & Touche LLP
COUNSEL
Debevoise & Plimpton
Printed in the U.S.A.
LAA-1-398
(3/98)
Lord Abbett
Affiliated Fund, Inc.
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
March 1, 1998
<PAGE>
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION MARCH 1, 1998
Lord Abbett Affiliated Fund, Inc.
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord Abbett Distributor LLC
("Lord Abbett Distributor") at The General Motors Building, 767 Fifth Avenue,
New York, New York 10153-0203. This Statement relates to, and should be read in
conjunction with, the Prospectus dated March 1, 1998.
Lord Abbett Affiliated Fund, Inc. (sometimes referred to as "we" or the "Fund")
was organized in 1934 and was reincorporated under Maryland law on November 26,
1975. The Fund has 2,000,000,000 shares of authorized capital stock consisting
of five classes (A, B, C, P and Y), $0.001 par value. The Board of Directors
will allocate these authorized shares of capital stock among the classes from
time to time. All shares have equal noncumulative voting rights and equal rights
with respect to dividends, assets and liquidation, except for certain
class-specific expenses. They are fully paid and nonassessable when issued and
have no preemptive or conversion rights.
Rule 18f-2 under the Act provides that any matter required to be submitted, by
the provisions of the Act or applicable state law or otherwise, to the holders
of the outstanding voting securities of an investment company such as the Fund
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each class affected by such
matter. Rule 18f-2 further provides that a class shall be deemed to be affected
by a matter unless the interests of each class in the matter are substantially
identical or the matter does not affect any interest of such class. However, the
Rule exempts the selection of independent public accountants, the approval of
principal distributing contracts and the election of directors from its separate
voting requirements.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 212-848-1800. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS Page
1. Investment Policies 2
2. Directors and Officers 4
3. Investment Advisory and Other Services 7
4. Portfolio Transactions 7
5. Purchases, Redemptions and
Shareholder Services 8
6. Past Performance 17
7. Taxes 17
8. Information About the Fund 19
9. Financial Statements 19
<PAGE>
1.
INVESTMENT POLICIES
FUNDAMENTAL INVESTMENT RESTRICTIONS
We are subject to the following investment restrictions which cannot be changed
without approval of a majority of our outstanding shares. The Fund may not: (1)
borrow money, except that (i) the Fund may borrow from banks (as defined in the
Investment Company Act of 1940, as amended (the "Act")) in amounts up to 33 1/3%
of its total assets (including the amount borrowed), (ii) the Fund may borrow up
to an additional 5% of its total assets for temporary purposes, (iii) the Fund
may obtain such short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities and (iv) the Fund may purchase
securities on margin to the extent permitted by applicable law; (2) pledge its
assets (other than to secure borrowings, or to the extent permitted by the
Fund's investment policies, as permitted by applicable law); (3) engage in the
underwriting of securities, except pursuant to a merger or acquisition or to the
extent that, in connection with the disposition of its portfolio securities, it
may be deemed to be an underwriter under federal securities laws; (4) make loans
to other persons, except that the acquisition of bonds, debentures or other
corporate debt securities and investment in government obligations, commercial
paper, pass-through instruments, certificates of deposit, bankers acceptances,
repurchase agreements or any similar instruments shall not be subject to this
limitation, and except further that the Fund may lend its portfolio securities,
provided that the lending of portfolio securities may be made only in accordance
with applicable law; (5) buy or sell real estate (except that the Fund may
invest in securities directly or indirectly secured by real estate or interests
therein or issued by companies which invest in real estate or interests therein)
or commodities or commodity contracts (except to the extent the Fund may do so
in accordance with applicable law and without registering as a commodity pool
operator under the Commodity Exchange Act as, for example, with futures
contracts); (6) with respect to 75% of the gross assets of the Fund, buy
securities of one issuer representing more than (i) 5% of the Fund's gross
assets, except securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities or (ii) 10% of the voting securities of such
issuer; (7) invest more than 25% of its assets, taken at market value, in the
securities of issuers in any particular industry (excluding securities of the
U.S. Government, its agencies and instrumentalities); or (8) issue senior
securities to the extent such issuance would violate applicable law.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by changes in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. In addition to the investment
restrictions above which cannot be changed without shareholder approval, we also
are subject to the following non-fundamental investment policies which may be
changed by the Board of Directors without shareholder approval. The Fund may
not: (1) borrow in excess of 33 1/3% of its total assets (including the amount
borrowed), and then only as a temporary measure for extraordinary or emergency
purposes; (2) make short sales of securities or maintain a short position except
to the extent permitted by applicable law; (3) invest knowingly more than 15% of
its net assets (at the time of investment) in illiquid securities, except for
securities qualifying for resale under Rule 144A of the Securities Act of 1933,
deemed to be liquid by the Board of Directors; (4) invest in the securities of
other investment companies except as permitted by applicable law; (5) invest in
securities of issuers which, with their predecessors, have a record of less than
three years' continuous operations, if more than 5% of the Fund's total assets
would be invested in such securities (this restriction shall not apply to
mortgage-backed securities, asset-backed securities or obligations issued or
guaranteed by the U. S. Government, its agencies or instrumentalities); (6) hold
securities of any issuer if more than 1/2 of 1% of the securities of such issuer
are owned beneficially by one or more officers or directors of the Fund or by
one or more partners or members of the Fund's underwriter or investment adviser
if these owners in the aggregate own beneficially more than 5% of the securities
of such issuer; (7) invest in warrants if, at the time of the acquisition, its
investment in warrants, valued at the lower of cost or market, would exceed 5%
of the Fund's total assets (included within such limitation, but not to exceed
2% of the Fund's total assets, are warrants which are not listed on the New York
or American Stock Exchange or a major foreign exchange); (8) invest in real
estate limited partnership interests or interests in oil, gas or other mineral
leases, or exploration or other development programs, except that the Fund may
invest in securities issued by companies that engage in oil, gas or other
mineral exploration or other development activities; (9) write, purchase or sell
puts, calls, straddles, spreads or combinations thereof, except to the extent
permitted in the Fund's prospectus and statement of additional information, as
they may be amended from time to time; (10) buy from or sell to any of its
officers, directors, employees, or its investment adviser or any of its
<PAGE>
officers, directors, partners or employees, any securities other than shares of
the Fund's common stock; or (11) pledge, mortgage or hypothecate its assets,
however, this provision does not apply to the grant of escrow receipts or the
entry into other similar escrow arrangements arising out of the writing of
covered call options.
Although it has no current intention to do so, the Fund may invest in financial
futures and options on financial futures.
For the year ended October 31, 1997, the portfolio turnover rate was 46.41%
versus 47.06% for the prior year.
LENDING PORTFOLIO SECURITIES. The Fund may lend portfolio securities to
registered broker-dealers. These loans may not exceed 30% of the Fund's total
assets. The Fund's loans of securities will be collateralized by cash or
marketable securities issued or guaranteed by the U.S. Government or its
agencies ("U.S. Government Securities") or other permissible means. The cash or
instruments collateralizing the Fund's loans of securities will be maintained at
all times in an amount at least equal to the current market value of the loaned
securities. From time to time, the Fund may allow to the borrower and/or a third
party that is not affiliated with the Fund and is acting as a "placing broker" a
part of the interest received with respect to the investment of collateral
received for securities loaned. No fee will be paid to affiliated persons of the
Fund.
By lending portfolio securities, the Fund can increase its income by continuing
to receive interest on the loaned securities as well as by either investing the
cash collateral in permissible investments, such as U.S. Government Securities,
or obtaining yield in the form of interest paid by the borrower when such U.S.
Government Securities are used as collateral. The Fund will comply with the
following conditions whenever it loans securities: (i) the Fund must receive at
least 100% collateral from the borrower; (ii) the borrower must increase the
collateral whenever the market value of the securities loaned rises above the
level of the collateral; (iii) the Fund must be able to terminate the loan at
any time; (iv) the Fund must receive reasonable compensation with respect to the
loan, as well as any dividends, interest or other distributions on the loaned
securities; (v) the Fund may pay only reasonable fees in connection with the
loan and (vi) voting rights on the loaned securities may pass to the borrower
except that, if a material event adversely affecting the investment in the
loaned securities occurs, the Fund's Board of Directors must terminate the loan
and regain the right to vote the securities.
RULE 144A SECURITIES. We may invest in securities qualifying for resale to
"qualified institutional buyers" under SEC Rule 144A that are determined by the
Board, or by Lord Abbett pursuant to the Board's delegation, to be liquid
securities. The Board will review quarterly the liquidity of the investments the
Fund makes in such securities. Investments by the Fund in Rule 144A securities
initially determined to be liquid could have the effect of diminishing the level
of the Fund's liquidity during periods of decreased market interest in such
securities among qualified institutional buyers.
OTHER INVESTMENT POLICIES (WHICH CAN BE CHANGED WITHOUT SHAREHOLDER APPROVAL)
As stated in the Prospectus, we may write covered call options which are traded
on a national securities exchange with respect to securities in our portfolio in
an attempt to increase our income and to provide greater flexibility in the
disposition of our portfolio securities. A "call option" is a contract sold for
a price (the "premium") giving its holder the right to buy a specific number of
shares of stock at a specific price prior to a specified date. A "covered call
option" is a call option issued on securities already owned by the writer of the
call option for delivery to the holder upon the exercise of the option. During
the period of the option, we forgo the opportunity to profit from any increase
in the market price of the underlying security above the exercise price of the
option (to the extent that the increase exceeds our net premium). We also may
enter into "closing purchase transactions" in order to terminate our obligation
to deliver the underlying security (this may result in a short-term gain or
loss). A closing purchase transaction is the purchase of a call option (at a
cost which may be more or less than the premium received for writing the
original call option) on the same security, with the same exercise price and
call period as the option previously written. If we are unable to enter into a
closing purchase transaction, we may be required to hold a security that we
might otherwise have sold to protect against depreciation. We do not intend to
write covered call options with respect to securities with an aggregate market
value of more than 10% of our gross assets at the time an option is written.
This percentage limitation will not be increased without prior disclosure in our
current Prospectus.
<PAGE>
RISK FACTORS. As stated in the Prospectus, we may invest no more than 5% of our
net assets (at the time of investment) in lower-rated, high-yield bonds. In
general, the market for lower-rated, high-yield bonds is more limited than the
market for higher-rated bonds, and because trading in such bonds may be thinner
and less active, the market prices of such bonds may fluctuate more than the
prices of higher-rated bonds, particularly in times of market stress. In
addition, while the market for high-yield, corporate debt securities has been in
existence for many years, the market in recent years experienced a dramatic
increase in the large-scale use of such securities to fund highly-leveraged
corporate acquisitions and restructurings. Accordingly, past experience may not
provide an accurate indication of future performance of the high-yield bond
market, especially during periods of economic recession. Other risks which may
be associated with lower-rated, high-yield bonds include their relative
insensitivity to interest-rate changes; the exercise of any of their redemption
or call provisions in a declining market which may result in their replacement
by lower-yielding bonds; and legislation, from time to time, which may adversely
affect their market. Since the risk of default is higher among lower-rated,
high-yield bonds, Lord Abbett's research and analyses are an important
ingredient in the selection of such bonds. Through portfolio diversification,
good credit analysis and attention to current developments and trends in
interest rates and economic conditions, investment risk can be reduced, although
there is no assurance that losses will not occur. The Fund does not have any
minimum rating criteria applicable to the fixed-income securities in which it
invests.
2.
DIRECTORS AND OFFICERS
The following directors are partners of Lord, Abbett & Co. ("Lord Abbett"), The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. They
have been associated with Lord Abbett for over five years and are also officers,
directors or trustees of the twelve other Lord Abbett-sponsored funds. They are
"interested persons" as defined in the Act, and as such, may be considered to
have an indirect financial interest in the Rule 12b-1 Plan described in the
Prospectus.
Robert S. Dow, age 52, Chairman and President
E. Wayne Nordberg, age 59
The following outside directors are also directors or trustees of the twelve
other Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow
Courtroom Television Network
600 Third Avenue
New York, New York
Chief Executive Officer of Courtroom Television Network. Formerly President and
Chief Executive Officer of Time Warner Cable Programming, Inc. Prior to that,
formerly President and Chief Operating Officer of Home Box Office, Inc. Age 56.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 67.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 72.
<PAGE>
C. Alan MacDonald
Directorship Inc.
8 Sound Shore Drive
Greenwich, Connecticut
Managing Director of Directorship Inc., a consultancy in board management and
corporate governance. Formerly General Partner of The Marketing Partnership,
Inc., a full service marketing consulting firm (1994-1997). Prior to that,
formerly Chairman and Chief Executive Officer of Lincoln Snacks, Inc.,
manufacturer of branded snack foods (1992-1994). Currently serves as Director of
Den West Restaurant Co., J. B. Williams, and Fountainhead Water Company. Age 64.
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 69.
Thomas J. Neff
Spencer Stuart & Associates
277 Park Avenue
New York, New York
Chairman of Spencer Stuart U.S., an executive search consulting firm. Age 60.
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third and fourth columns set forth information
with respect to the equity-based benefits accrued for outside directors
maintained by the Lord Abbett-sponsored funds. The fourth column sets forth the
total compensation payable by such funds to the outside directors. No director
of the Fund associated with Lord Abbett and no officer of the Fund received any
compensation from the Fund for acting as a director or officer.
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997
(1) (2) (3) (4)
Pension or For Year Ended
Retirement Benefits December 31, 1997
Accrued by the Total Compensation
Aggregate Fund and Accrued by the Fund and
Compensation Twelve Other Lord Twelve Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
NAME OF DIRECTOR THE FUND(1) FUNDS(2) FUNDS(3)
<S> <C> <C> <C>
E. Thayer Bigelow $22,939 $17,068 $56,000
Stewart S. Dixon $22,527 $32,190 $55,000
John C. Jansing $22,527 $45,085 (4) $55,000
C. Alan MacDonald $23,418 $30,703 $57,400
Hansel B. Millican, Jr. $22,719 $37,747 $55,000
Thomas J. Neff $22,839 $19,853 $56,000
<FN>
1. Outside trustees' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on the
net assets of each fund. A portion of the fees payable by the Fund to its
outside directors/trustees is being deferred under a plan that deems the
deferred amounts to be invested in shares of the Fund for later distribution
to the directors/trustees.
2. The amounts in Column 3 were accrued by the Lord Abbett-Sponsored Funds for
the 12 months ended October 31, 1997 with respect to the equity based plans
established for independent directors in 1996. This plan supercedes a
previously approved retirement plan for all future directors. Current
directors had the option to convert their accrued benefits under the
retirement plan. All of the outside directors except one made such an
election.
3. This column shows aggregate compensation, including directors fees and
attendance fees for board and committee meetings, of a nature referred to in
footnote one, accrued by the Lord Abbett-sponsored funds during the year
ended December 31, 1997. The amounts of the aggregate compensation payable by
the Fund as of October 31, 1997 deemed invested in Fund shares, including
dividends reinvested and changes in net asset value applicable to such deemed
investments, were: Mr. Bigelow, $72,452; Mr. Dixon, $323,416; Mr. Jansing,
$390,389; Mr. MacDonald, $234,210; Mr. Millican, $394,521 and Mr. Neff,
$390,787. If the amounts deemed invested in Fund shares were added to each
director's actual holdings of Fund shares as of October 31, 1997, each would
own, the following: Mr. Bigelow, 1,546 shares; Mr. Dixon, 2,276 shares; Mr.
Jansing, 21,336 shares; Mr. McDonald, 30,234 shares; Mr. Millican, 21,998
shares; and Mr. Neff, 5,823 shares.
4. Mr. Jansing chose to continue to receive benefits under the retirement plan
which provides that outside directors (Trustees) may receive annual
retirement benefits for life equal to their final annual retainer following
retirement at or after age 72 with at least ten years of service. Thus, if
Mr. Jansing were to retire and the annual retainer payable by the funds were
the same as it is today, he would receive annual retirement benefits of
$50,000.
</FN>
</TABLE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Brown, Carper, Ms. Foster, Messrs. Hilstad, Hudson, Morris, Noelke and
Walsh are partners of Lord Abbett; the others are employees: W. Thomas Hudson,
age 56, Executive Vice President, Paul A. Hilstad, age 54, Vice President and
Secretary (with Lord Abbett since 1995; formerly Senior Vice President and
General Counsel of American Capital Management & Research, Inc.); Stephen I.
Allen, age 44; Zane E. Brown, age 46; Daniel E. Carper, age 45; Daria L. Foster,
age 43; Lawrence H. Kaplan, age 40 (with Lord Abbett since 1977 - formerly Vice
President and Chief Counsel of Salomon Brothers Asset Management Inc. - 1995 -
1997; prior thereto Senior Vice President and Associate General Counsel of
Kidder, Peabody & Co. Incorperated); Thomas F. Konop, age 55; Robert G. Morris,
age 52; Robert J. Noelke, age 40; A. Edward Oberhaus, age 37; Keith F. O'Connor,
age 42; John J. Walsh, age 61, Vice Presidents; and Donna M. McManus, age 36,
Treasurer (with Lord Abbett since 1996, formerly a Senior Manager at Deloitte &
Touche LLP).
The Fund's By-Laws provide that the Fund shall not hold an annual meeting of its
stockholders in any year unless one or more matters are required to be acted on
by stockholders under the Act, or unless called by a majority of the Board of
Directors or by stockholders holding at least one quarter of the stock of the
Fund outstanding and entitled to vote at the meeting. When any such annual
meeting is held, the stockholders will elect directors and vote on the approval
of the independent auditors of the Fund.
As of October 31, 1997 our officers and directors, as a group, owned less than
1% of our outstanding shares.
<PAGE>
3.
INVESTMENT ADVISORY AND OTHER SERVICES
As described under "Our Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. Eleven of the twelve general partners of Lord Abbett are
officers and/or directors of the Fund and are identified as follows: Stephen I.
Allen, Zane E. Brown, Daniel E. Carper, Robert S. Dow, Daria L. Foster, Paul A.
Hilstad, W. Thomas Hudson, Robert G. Morris, Robert J. Noelke, E. Wayne Nordberg
and John J. Walsh. The other general partner of Lord Abbett who is neither an
officer nor director of the Fund is Michael McLaughlin. The address of each
partner is The General Motors Building, 767 Fifth Avenue, New York, New York
10153-0203.
The services performed by Lord Abbett are described in the Prospectus under "Our
Management". Under the Management Agreement, we pay Lord Abbett a monthly fee,
based on average daily net assets for each month, at the annual rate of .5 of 1%
of the portion of our net assets not in excess of $200,000,000; .4 of 1% of the
portion in excess of $200,000,000, but not in excess of $500,000,000; .375 of 1%
of the portion in excess of $500,000,000, but not in excess of $700,000,000; .35
of 1% of the portion in excess of $700,000,000, but not in excess of
$900,000,000; and .3 of 1% of the portion in excess of $900,000,000. This fee is
allocated among Class A, B and C based on the classes' proportionate shares of
such average daily net assets.
For the fiscal years ended October 31, 1997, 1996 and 1995, the management fees
paid to Lord Abbett by the Fund amounted to $22,192,209, $17,683,694 and
$14,431,000, respectively.
We pay all expenses not expressly assumed by Lord Abbett, including without
limitation 12b-1 expenses, outside directors' fees and expenses, association
membership dues, legal and auditing fees, taxes, transfer and dividend
disbursing agent fees, shareholder servicing costs, expenses relating to
shareholder meetings, expenses of preparing, printing and mailing stock
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums, brokerage and other
expenses connected with executing portfolio transactions.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281 are
the independent auditors of the Fund and must be approved at least annually by
our Board of Directors to continue in such capacity. They perform audit services
for the Fund including the examination of financial statements included in our
annual report to shareholders.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York, is the Fund's
custodian. In accordance with the requirements of Rule 17f-5, the Fund's
directors have approved arrangements permitting the Fund's foreign assets not
held by BNY or its foreign branches to be held by certain qualified foreign
banks and depositories.
4.
PORTFOLIO TRANSACTIONS
Our policy is to obtain best execution on all our portfolio transactions, which
means that we seek to have purchases and sales of portfolio securities executed
at the most favorable prices, considering all costs of the transaction including
brokerage commissions and dealer markups and markdowns and taking into account
the full range and quality of the brokers' services. Consistent with obtaining
best execution, we generally pay, as described below, a higher commission than
some brokers might charge on the same transactions. Our policy with respect to
best execution governs the selection of brokers or dealers and the market in
which the transaction is executed. To the extent permitted by law, we may, if
considered advantageous, make a purchase from or sale to another Lord
Abbett-sponsored fund without the intervention of any broker-dealer.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services. Normally, the
selection is made by traders who are officers of the Fund and also are employees
of Lord Abbett. These traders do the trading as well for other accounts --
investment companies (of which they are also officers) and other investment
clients -- managed by Lord Abbett. They are responsible for obtaining best
execution.
<PAGE>
We pay a commission rate that we believe is appropriate to give maximum
assurance that our brokers will provide us, on a continuing basis, the highest
level of brokerage services available. While we do not always seek the lowest
possible commissions on particular trades, we believe that our commission rates
are in line with the rates that many other institutions pay. Our traders are
authorized to pay brokerage commissions in excess of those that other brokers
might accept on the same transactions in recognition of the value of the
services performed by the executing brokers, viewed in terms of either the
particular transaction or the overall responsibilities of Lord Abbett with
respect to us and the other accounts they manage. Such services include showing
us trading opportunities including blocks, a willingness and ability to take
positions in securities, knowledge of a particular security or market proven
ability to handle a particular type of trade, confidential treatment, promptness
and reliability.
Some of these brokers also provide research services at least some of which are
useful to Lord Abbett in their overall responsibilities with respect to us and
the other accounts they manage. Research includes the furnishing of analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts and trading equipment and
computer software packages, acquired from third-party suppliers, that enable
Lord Abbett to access various information bases. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Fund; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Fund, and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research services received from brokers
cannot be allocated to any particular account, are not a substitute for Lord
Abbett's services but are supplemental to their own research effort and when
utilized, are subject to internal analysis before being incorporated by Lord
Abbett into their investment process. As a practical matter, it would not be
possible for Lord Abbett to generate all of the information presently provided
by brokers. While receipt of research services from brokerage firms has not
reduced Lord Abbett's normal research activities, the expenses of Lord Abbett
could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Fund to purchase or sell portfolio securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day. Other clients who direct that their brokerage
business be placed with specific brokers or who invest through wrap accounts
introduced to Lord Abbett by certain brokers may not participate with us in the
buying and selling of the same securities as described above. If these clients
wish to buy or sell the same security as we do, they may have their transactions
executed at times different from our transactions and thus may not receive the
same price or incur the same commission cost as we do.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from dealers as
consideration for the direction to them of portfolio business.
For the fiscal years ended October 31, 1997, 1996 and 1995, we paid total
commissions to independent dealers of $7,681,037, $5,897,259, and $6,542,354,
respectively.
<PAGE>
5.
PURCHASES, REDEMPTIONS
AND SHAREHOLDER SERVICES
The Fund values its portfolio securities at market value as of the close of the
NYSE. Market value will be determined as follows: securities listed or admitted
to trading privileges on the New York or American Stock Exchange or on the
NASDAQ National Market System are valued at the last sales price, or, if there
is no sale on that day, at the mean between the last bid and asked prices, or,
in the case of bonds, in the over-the-counter market if, in the judgment of the
Fund's officers, that market more accurately reflects the market value of the
bonds. Over-the-counter securities not traded on the NASDAQ National Market
System are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not available are valued at fair market value
under procedures approved by the Board of Directors.
Information concerning how we value our shares for the purchase and redemption
of our shares is described in the Prospectus under "Purchases" and
"Redemptions", respectively.
As disclosed in the Prospectus, we calculate our net asset value and are
otherwise open for business on each day that the NYSE is open for trading. The
NYSE is closed on Saturdays and Sundays and the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
The maximum offering price of our Class A shares on October 31, 1997 was
computed as follows:
Net asset value per share (net assets divided by
shares
outstanding)..........................................................$14.84
Maximum offering price per share (net asset value
divided by .9425).................................................$15.75
The net asset value per share for the Class B and Class C shares will be
determined in the same manner as for the Class A shares (net assets divided by
shares outstanding). Our Class B and Class C shares will be sold at net asset
value.
The Fund has entered into a distribution agreement with Lord Abbett Distributor
LLC, a New York limited liability company ("Lord Abbett Distributor") and
subsidiary of Lord Abbett, under which Lord Abbett Distributor is obligated to
use its best efforts to find purchasers for the shares of the Fund, and to make
reasonable efforts to sell Fund shares so long as, in Lord Abbett Distributor's
judgment, a substantial distribution can be obtained by reasonable efforts.
For the last three fiscal years, Lord Abbett, as our principal underwriter,
received net commissions after allowance of a portion of the sales charge to
independent dealers with respect to Class A shares as follows:
YEAR ENDED OCTOBER 31,
1997 1996 1995
---- ---- ----
Gross sales charge $16,853,194 $15,464,565 $6,940,216
Amount allowed to dealers $14,522,076 $13,701,148 $6,295,403
----------- ----------- ----------
Net commissions
received by
Lord Abbett $2,331,118 $1,763,417 $ 644,813
=========== ========== ===========
CONVERSION OF CLASS B SHARES. The conversion of Class B shares on the eighth
anniversary of their purchase is subject to the continuing availability of a
private letter ruling from the Internal Revenue Service, or an opinion of
counsel or tax adviser, to the effect that the conversion of Class B shares does
not constitute a taxable event for the holder under Federal income tax law. If
such a revenue ruling or opinion is no longer available, the automatic
conversion feature may be suspended, in which event no further conversions of
Class B shares would occur while such suspension remained in effect. Although
Class B shares could then be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a sales
charge or fee, such exchange could constitute a taxable event for the holder.
<PAGE>
ALTERNATIVE SALES ARRANGEMENTS
CLASSES OF SHARES. The Fund offers investors five different classes of shares.
This Prospectus offers four of those classes designated Class A, B, C and P. The
different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely have different
share prices. Investors should read this section carefully to determine which
class represents the best investment option for their particular situation.
CLASS A SHARES. If you buy Class A shares, you pay an initial sales charge on
investments of less than $1 million (or on investments for employer-sponsored
retirement plans under the Internal Revenue Code (hereinafter referred to as
"Retirement Plans") with less than 100 eligible employees or on investments that
do not qualify to be under a "special retirement wrap program" as a program
sponsored by an authorized institution showing one or more characteristics
distinguishing it, in the opinion of Lord Abbett Distributor from a mutual fund
wrap fee program). If you purchase Class A shares as part of an investment of at
least $1 million (or for Retirement Plans with at least 100 eligible employees
or under a special retirement wrap program) in shares of one or more Lord
Abbett-sponsored funds, you will not pay an initial sales charge, but if you
redeem any of those shares within 24 months after the month in which you buy
them, you may pay to the Fund a contingent deferred sales charge ("CDSC") of 1%
except for redemptions under a special retirement wrap program. Class A shares
are subject to service and distribution fees that are currently estimated to
total annually approximately 0.23 of 1% of the annual net asset value of the
Class A shares. The initial sales charge rates, the CDSC and the Rule 12b-1 plan
applicable to the Class A shares are described in "Buying Class A Shares" below.
CLASS B SHARES. If you buy Class B shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the sixth anniversary of
buying them, you will normally pay a CDSC to Lord Abbett Distributor LLC ("Lord
Abbett Distributor"). That CDSC varies depending on how long you own shares.
Class B shares are subject to service and distribution fees at an annual rate of
1% of the annual net asset value of the Class B shares. The CDSC and the Rule
12b-1 plan applicable to the Class B shares are described in "Buying Class B
Shares" below.
CLASS C SHARES. If you buy Class C shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the first anniversary of
buying them, you will normally pay the Fund a CDSC of 1%. Class C shares are
subject to service and distribution fees at an annual rate of 1% of the annual
net asset value of the Class C shares. The CDSC and the Rule 12b-1 plan
applicable to the C shares are described in "Buying Class C Shares" below.
CLASS P SHARES. If you buy Class P shares, you pay no sales charge at the time
of purchase, and if you redeem your shares you pay no CDSC. Class P shares are
subject to service and distribution fees at an annual rate of .45 of 1% of the
average daily net asset value of the Class P shares. The Rule 12b-1 plan
applicable to the Class P shares is described in "Class P Rule 12b-1 Plan".
Class P shares are available to a limited number of investors.
WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial adviser. The Fund's class-specific expenses and the
effect of the different types of sales charges on your investment will affect
your investment results over time. The most important factors are how much you
plan to invest and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider another class of
shares.
<PAGE>
In the following discussion, to help provide you and your financial adviser with
a framework in which to choose a class, we have made some assumptions using a
hypothetical investment in the Fund. We used the sales charge rates that apply
to Class A, Class B and Class C, and considered the effect of the higher
distribution fees on Class B and Class C expenses (which will affect your
investment return). Of course, the actual performance of your investment cannot
be predicted and will vary, based on the Fund's actual investment returns, the
operating expenses borne by each class of shares, and the class of shares you
purchase. The factors briefly discussed below are not intended to be investment
advice, guidelines or recommendations, because each investor's financial
considerations are different. The discussion below of the factors to consider in
purchasing a particular class of shares assumes that you will purchase only one
class of shares and not a combination of shares of different classes.
HOW LONG DO YOU EXPECT TO HOLD YOUR INVESTMENT? While future financial needs
cannot be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares. For
example, over time, the reduced sales charges available for larger purchases of
Class A shares may offset the effect of paying an initial sales charge on your
investment, compared to the effect over time of higher class-specific expenses
on Class B or Class C shares for which no initial sales charge is paid. Because
of the effect of class-based expenses, your choice should also depend on how
much you plan to invest.
INVESTING FOR THE SHORT TERM. If you have a short-term investment horizon (that
is, you plan to hold your shares for not more than six years), you should
probably consider purchasing Class A or Class C shares rather than Class B
shares. This is because of the effect of the Class B CDSC if you redeem before
the sixth anniversary of your purchase, as well as the effect of the Class B
distribution fee on the investment return for that class in the short term.
Class C shares might be the appropriate choice (especially for investments of
less than $100,000), because there is no initial sales charge on Class C shares,
and the CDSC does not apply to amounts you redeem after holding them one year.
However, if you plan to invest more than $100,000 for the short term, then the
more you invest and the more your investment horizon increases toward six years,
the more attractive the Class A share option may become. This is because the
annual distribution fee on Class C shares will have a greater impact on your
account over the longer term than the reduced front-end sales charge available
for larger purchases of Class A shares. For example, Class A might be more
appropriate than Class C for investments of more than $100,000 expected to be
held for 5 or 6 years (or more). For investments over $250,000 expected to be
held 4 to 6 years (or more), Class A shares may become more appropriate than
Class C. If you are investing $500,000 or more, Class A may become more
desirable as your investment horizon approaches 3 years or more.
For most investors who invest $1 million or more or for Retirement Plans with at
least 100 eligible employees or for investments pursuant to a special retirement
wrap program, in most cases Class A shares will be the most advantageous choice,
no matter how long you intend to hold your shares. For that reason, it may not
be suitable for you to place a purchase order for Class B shares of $500,000 or
more or a purchase order for Class C shares of $1,000,000 or more. In addition,
it may not be suitable for you to place an order for Class B or C shares for a
Retirement Plan with at least 100 eligible employees or for a special retirement
wrap program. You should discuss this with your financial advisor.
INVESTING FOR THE LONGER TERM. If you are investing for the longer term (for
example, to provide for future college expenses for your child) and do not
expect to need access to your money for seven years or more, Class B shares may
be an appropriate investment option, if you plan to invest less than $100,000.
If you plan to invest more than $100,000 over the long term, Class A shares will
likely be more advantageous than Class B shares or Class C shares, as discussed
above, because of the effect of the expected lower expenses for Class A shares
and the reduced initial sales charges available for larger investments in Class
A shares under the Fund's Rights of Accumulation. Of course, these examples are
based on approximations of the effect of current sales charges and expenses on a
hypothetical investment over time, and should not be relied on as rigid
guidelines.
<PAGE>
ARE THERE DIFFERENCES IN ACCOUNT FEATURES THAT MATTER TO YOU? Some account
features are available in whole or in part to Class A, Class B and Class C
shareholders. Other features (such as Systematic Withdrawal Plans) might not be
advisable in non-Retirement Plan accounts for Class B shareholders (because of
the effect of the CDSC on the entire amount of a withdrawal if it exceeds 12%
annually) and in any account for Class C shareholders during the first year of
share ownership (due to the CDSC on withdrawals during that year). See
"Systematic Withdrawal Plan" under "Shareholder Services" in the Prospectus for
more information about the 12% annual waiver of the CDSC. You should carefully
review how you plan to use your investment account before deciding which class
of shares you buy. For example, the dividends payable to Class B and Class C
shareholders will be reduced by the expenses borne solely by each of these
classes, such as the higher distribution fee to which Class B and Class C shares
are subject, as described below.
HOW DOES IT AFFECT PAYMENTS TO MY BROKER? A salesperson, such as a broker, or
any other person who is entitled to receive compensation for selling Fund shares
may receive different compensation for selling one class than for selling
another class. As discussed in more detail below, such compensation is primarily
paid at the time of sale in the case of Class A and B shares and is paid over
time, so long as shares remain outstanding, in the case of Class C shares. It is
important that investors understand that the primary purpose of the CDSC for the
Class B shares and the distribution fee for Class B and Class C shares is the
same as the purpose of the front-end sales charge on sales of Class A shares: to
compensate brokers and other persons selling such shares. The CDSC, if payable,
supplements the Class B distribution fee and reduces the Class C distribution
fee expenses for the Fund and Class C shareholders.
CLASS A, B AND C RULE 12B-1 PLANS. As described in the Prospectus, the Fund has
adopted a Distribution Plan and Agreement pursuant to Rule 12b-1 of the Act for
each of the three Fund Classes: the "A Plan", the "B Plan" and the "C Plan",
respectively. In adopting each Plan and in approving its continuance, the Board
of Directors has concluded that there is a reasonable likelihood that each Plan
will benefit its respective Class and such Class' shareholders. The expected
benefits include greater sales and lower redemptions of Class shares, which
should allow each Class to maintain a consistent cash flow, and a higher quality
of service to shareholders by authorized institutions than would otherwise be
the case. During the last fiscal year, the Fund accrued or paid through Lord
Abbett to authorized institutions $11,638,558 under the A Plan, $18,947 under
the B Plan and $8,776 under the C Plan. Lord Abbett used all amounts received
under the A Plan for payments to dealers for (i) providing continuous services
to the Class A shareholders, such as answering shareholder inquiries,
maintaining records, and assisting shareholders in making redemptions,
transfers, additional purchases and exchanges and (ii) their assistance in
distributing Class A shares of the Fund.
Each Plan requires the directors to review, on a quarterly basis, written
reports of all amounts expended pursuant to the Plan and the purposes for which
such expenditures were made. Each Plan shall continue in effect only if its
continuance is specifically approved at least annually by vote of the directors,
including a majority of the directors who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related to the Plan ("outside directors"), cast in
person at a meeting called for the purpose of voting on the Plan. No Plan may be
amended to increase materially above the limits set forth therein the amount
spent for distribution expenses thereunder without approval by a majority of the
outstanding voting securities of the applicable class and the approval of a
majority of the directors, including a majority of the outside directors. Each
Plan may be terminated at any time by vote of a majority of the outside
directors or by vote of a majority of its Class's outstanding voting securities.
CONTINGENT DEFERRED SALES CHARGES. A Contingent Deferred Sales Charge ("CDSC")
(i) applies regardless of class, (ii) will not apply to shares purchased by the
reinvestment of dividends or capital gains distributions; (iii) will be assessed
on the lesser of the net asset value of the shares at the time of redemption or
the original purchase price and (iv) will not be imposed on the amount of your
account value represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of dividends and
capital gains distributions) and upon early redemption of shares.
CLASS A SHARES. As stated in the Prospectus, a CDSC of 1% is imposed with
respect to those Class A shares (or Class A shares of another Lord
Abbett-sponsored fund or series acquired through exchange of such shares) on
which the Fund has paid the one-time distribution fee of 1% if such shares are
redeemed out of the Lord Abbett-sponsored family of funds within a period of 24
months from the end of the month in which the original sale occurred.
<PAGE>
CLASS B SHARES. As stated in the Prospectus, if Class B shares (or Class B
shares of another Lord Abbett-sponsored fund or series acquired through exchange
of such shares) are redeemed out of the Lord Abbett-sponsored family of funds
for cash before the sixth anniversary of their purchase, a CDSC will be deducted
from the redemption proceeds. The Class B CDSC is paid to Lord Abbett
Distributor to reimburse its expenses, in whole or in part, for providing
distribution-related service to the Fund in connection with the sale of Class B
shares.
To determine whether the CDSC applies to a redemption, the Fund redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held on or after the sixth anniversary
of their purchase, and (3) shares held the longest before such sixth
anniversary.
The amount of the contingent deferred sales charge will depend on the number of
years since you invested and the dollar amount being redeemed, according to the
following schedule:
Anniversary of the Day on Contingent Deferred Sales Charge
Which the Purchase Order Was Accepted on Redemptions
(As % of Amount Subject to Charge)
Before the 1st........................................................5.0%
On the 1st, before the 2nd............................................4.0%
On the 2nd, before the 3rd............................................3.0%
On the 3rd, before the 4th............................................3.0%
On the 4th, before the 5th............................................2.0%
On the 5th, before the 6th ...........................................1.0%
On or after the 6th anniversary.......................................None
In the table, an "anniversary" is the 365th day subsequent to the acceptance of
a purchase order or a prior anniversary. All purchases are considered to have
been made on the business day on which the purchase order was accepted.
CLASS C SHARES. As stated in the Prospectus, if Class C shares are redeemed for
cash before the first anniversary of their purchase, the redeeming shareholder
will be required to pay to the Fund on behalf of Class C shares a CDSC of 1% of
the lower of cost or the then net asset value of Class C shares redeemed. If
such shares are exchanged into the same class of another Lord Abbett-sponsored
fund and subsequently redeemed before the first anniversary of their original
purchase, the charge will be collected by the other fund on behalf of this
Fund's Class C shares.
GENERAL. Each percentage (1% in the case of Class A and C shares and 5% through
1% in the case of Class B shares) used to calculate CDSCs described above for
the Class A, Class B and Class C shares is sometimes hereinafter referred to as
the "Applicable Percentage".
With respect to Class A and Class B shares, no CDSC is payable on redemptions by
participants or beneficiaries from employer-sponsored retirement plans under the
Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service and for returns of
excess contributions to retirement plan sponsors. With respect to Class A shares
purchased pursuant to a special retirement wrap program, no CDSC is payable on
redemptions which continue or investments in another fund participating in the
program. In the case of Class A and Class C shares, the CDSC is received by the
Fund and is intended to reimburse all or a portion of the amount paid by the
Fund if the shares are redeemed before the Fund has had an opportunity to
realize the anticipated benefits of having a long-term shareholder account in
the Fund. In the case of Class B shares, the CDSC is received by Lord Abbett
Distributor and is intended to reimburse its expenses of providing
distribution-related service to the Fund (including recoupment of the commission
payments made) in connection with the sale of Class B shares before Lord Abbett
Distributor has had an opportunity to realize its anticipated reimbursement by
having such a long-term shareholder account subject to the B Plan distribution
fee.
<PAGE>
The other funds and series which participate in the Telephone Exchange Privilege
(except (a) Lord Abbett U.S. Government Securities Money Market Fund, Inc.
("GSMMF"), (b) certain series of Lord Abbett Tax-Free Income Fund and Lord
Abbett Tax-Free Income Trust for which a Rule 12b-1 Plan is not yet in effect,
and (c) any authorized institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain omnibus account and other criteria,
hereinafter referred to as an "authorized money market fund" or "AMMF"
(collectively, the "Non-12b-1 Funds")) have instituted a CDSC for each class on
the same terms and conditions. No CDSC will be charged on an exchange of shares
of the same class between Lord Abbett funds or between such funds and AMMF. Upon
redemption of shares out of the Lord Abbett family of funds or out of AMMF, the
CDSC will be charged on behalf of and paid: (i) to the fund in which the
original purchase (subject to a CDSC) occurred, in the case of the Class A and
Class C shares and (ii) to Lord Abbett Distributor if the original purchase was
subject to a CDSC, in the case of the Class B shares. Thus, if shares of a Lord
Abbett fund are exchanged for shares of the same class of another such fund and
the shares of the same class tendered ("Exchanged Shares") are subject to a
CDSC, the CDSC will carry over to the shares of the same class being acquired,
including GSMMF and AMMF ("Acquired Shares"). Any CDSC that is carried over to
Acquired Shares is calculated as if the holder of the Acquired Shares had held
those shares from the date on which he or she became the holder of the Exchanged
Shares. Although the Non-12b-1 Funds will not pay a distribution fee on their
own shares, and will, therefore, not impose their own CDSC, the Non-12b-1 Funds
will collect the CDSC (a) on behalf of other Lord Abbett funds, in the case of
the Class A and Class C shares and (b) on behalf of Lord Abbett Distributor, in
the case of the Class B shares. Acquired Shares held in GSMMF and AMMF which are
subject to a CDSC will be credited with the time such shares are held in GSMMF
but will not be credited with the time such shares are held in AMMF. Therefore,
if your Acquired Shares held in AMMF qualified for no CDSC or a lower Applicable
Percentage at the time of exchange into AMMF, that Applicable Percentage will
apply to redemptions for cash from AMMF, regardless of the time you have held
Acquired Shares in AMMF.
In no event will the amount of the CDSC exceed the Applicable Percentage of the
lesser of (i) the net asset value of the shares redeemed or (ii) the original
cost of such shares (or of the Exchanged Shares for which such shares were
acquired). No CDSC will be imposed when the investor redeems (i) amounts derived
from increases in the value of the account above the total cost of shares being
redeemed due to increases in net asset value, (ii) shares with respect to which
no Lord Abbett fund paid a 12b-1 fee and, in the case of Class B shares, Lord
Abbett Distributor paid no sales charge or service fee (including shares
acquired through reinvestment of dividend income and capital gains
distributions) or (iii) shares which, together with Exchanged Shares, have been
held continuously for 24 months from the end of the month in which the original
sale occurred (in the case of Class A shares); for six years or more (in the
case of Class B shares) and for one year or more (in the case of Class C
shares). In determining whether a CDSC is payable, (a) shares not subject to the
CDSC will be redeemed before shares subject to the CDSC and (b) of the shares
subject to a CDSC, those held the longest will be the first to be redeemed.
EXCHANGES. The Prospectus briefly describes the Telephone Exchange Privilege.
You may exchange some or all of your shares of any class for those in the same
class of: (i) Lord Abbett-sponsored funds currently offered to the public with a
sales charge (front-end, back-end or level ), (ii) GSMMF or (iii) AMMF, to the
extent offers and sales may be made in your state. You should read the
prospectus of the other fund before exchanging. In establishing a new account by
exchange, shares of the Fund being exchanged must have a value equal to at least
the minimum initial investment required for the other fund into which the
exchange is made.
Shareholders in other Lord Abbett-sponsored funds and AMMF have the same right
to exchange their shares for the corresponding class of the Fund's shares.
Exchanges are based on relative net asset values on the day instructions are
received by the Fund in Kansas City if the instructions are received prior to
the close of the NYSE in proper form. No sales charges are imposed except in the
case of exchanges out of GSMMF or AMMF (unless a sales charge (front-end,
back-end or level) was paid on the initial investment in a Lord Abbett-sponsored
fund). Exercise of the exchange privilege will be treated as a sale for federal
income tax purposes, and, depending on the circumstances, a gain or loss may be
recognized. In the case of an exchange of shares that have been held for 90 days
or less where no sales charge is payable on the exchange, the original sales
charge incurred with respect to the exchanged shares will be taken into account
in determining gain or loss on the exchange only to the extent such charge
exceeds the sales charge that would have been payable on the acquired shares had
they been acquired for cash rather than by exchange. The portion of the original
sales charge not so taken into account will increase the basis of the acquired
shares.
<PAGE>
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are AMMF and other Lord Abbett-sponsored funds which are eligible for the
exchange privilege, except Lord Abbett Series Fund ("LASF") which offers its
shares only in connection with certain variable annuity contracts, Lord Abbett
Equity Fund ("LAEF") which is not issuing shares, and series of Lord Abbett
Research Fund not offered to the general public ("LARF").
STATEMENT OF INTENTION. Under the terms of the Statement of Intention to invest
$50,000 or more over a 13-month period as described in the Prospectus, shares of
a Lord Abbett-sponsored fund (other than shares of LAEF, LASF, LARF, GSMMF and
AMMF, unless holdings in GSMMF and AMMF are attributable to shares exchanged
from a Lord Abbett-sponsored fund offered with a front-end, back-end or level
sales charge) currently owned by you are credited as purchases (at their current
offering prices on the date the Statement is signed) toward achieving the stated
investment and reduced initial sales charge for Class A shares. Class A shares
valued at 5% of the amount of intended purchases are escrowed and may be
redeemed to cover the additional sales charge payable if the Statement is not
completed. The Statement of Intention is neither a binding obligation on you to
buy, nor on the Fund to sell, the full amount indicated.
RIGHTS OF ACCUMULATION. As stated in the Prospectus, purchasers (as defined in
the Prospectus) may accumulate their investment in Lord Abbett-sponsored funds
(other than LAEF, LARF, LASF, GSMMF, and AMMF unless holdings in GSMMF or AMMF
are attributable to shares exchanged from a Lord Abbett-sponsored fund offered
with a front-end, back-end or level sales charge) so that a current investment,
plus the purchaser's holdings valued at the current maximum offering price,
reach a level eligible for a discounted sales charge for Class A shares.
NET ASSET VALUE PURCHASES OF CLASS A SHARES. As stated in the Prospectus, our
Class A shares may be purchased at net asset value by our directors, employees
of Lord Abbett, employees of our shareholder servicing agent and employees of
any securities dealer having a sales agreement with Lord Abbett who consents to
such purchases or by the director or custodian under any pension or
profit-sharing plan or Payroll Deduction IRA established for the benefit of such
persons or for the benefit of employees of any national securities trade
organization to which Lord Abbett belongs or any company with an account(s) in
excess of $10 million managed by Lord Abbett on a private-advisory-account
basis. For purposes of this paragraph, the terms "directors" and "employees"
include a director's or employee's spouse (including the surviving spouse of a
deceased director or employee). The terms "our directors" and "employees of Lord
Abbett" also include retired directors and employees and other family members
thereof.
Our Class A shares also may be purchased at net asset value (a) at $1 million or
more, (b) with dividends and distributions from Class A shares of other Lord
Abbett-sponsored funds, except for LARF, LAEF and LASF, (c) under the loan
feature of the Lord Abbett-sponsored prototype 403(b) plan for share purchases
representing the repayment of principal and interest, (d) by certain authorized
brokers, dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett Distributor in accordance
with certain standards approved by Lord Abbett Distributor, providing
specifically for the use of our shares in particular investment products made
available for a fee to clients of such brokers, dealers, registered investment
advisers and other financial institutions, ("mutual fund wrap fee program"), (e)
by employees, partners and owners of unaffiliated consultants and advisors to
Lord Abbett, Lord Abbett Distributor or Lord Abbett-sponsored funds who consent
to such purchase if such persons provide service to Lord Abbett, Lord Abbett
Distributor or such funds on a continuing basis and are familiar with such
funds, (f) through Retirement Plans with at least 100 eligible employees, (g) in
connection with a merger, acquisition or other reorganization, and (h) through a
"special retirement wrap program" sponsored by an authorized institution showing
one or more characteristics distinguishing it, in the opinion of Lord Abbett
Distributor from a mutual fund wrap program. Such characteristics include, among
other things, the fact that an authorized institution does not charge its
clients any fee of a consulting or advisory nature that is economically
equivalent to the distribution fee under Class A 12b-1 Plan and the fact that
the program relates to participant-directed Retirement Plan. Shares are offered
at net asset value to these investors for the purpose of promoting goodwill with
employees and others with whom Lord Abbett Distributor and/or the Fund has
business relationships.
<PAGE>
REDEMPTIONS. A redemption order is in proper form when it contains all of the
information and documentation required by the order form or supplementary by
Lord Abbett Distributor or the Fund to carry out the order. The signature(s) and
any legal capacity of the signer(s) must be guaranteed by an eligible guarantor.
See the Prospectus for expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Directors may authorize redemption of all of the shares in any
account in which there are fewer than 25 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 6 months prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
DIV-MOVE. Under the Div-Move service described in the Prospectus, you can invest
the dividends paid on your account of any class into an existing account of the
same class in any other Eligible Fund. The account must be either your account,
a joint account for you and your spouse, a single account for your spouse, or a
custodial account for your minor child under the age of 21. You should read the
prospectus of the other fund before investing.
INVEST-A-MATIC. The Invest-A-Matic method of investing in the Fund and/or any
other Eligible Fund is described in the Prospectus. To avail yourself of this
method you must complete the application form, selecting the time and amount of
your bank checking account withdrawals and the funds for investment, include a
voided, unsigned check and complete the bank authorization.
SYSTEMATIC WITHDRAWAL PLANS. The Systematic Withdrawal Plan ("SWP") also is
described in the Prospectus. You may establish a SWP if you own or purchase
uncertificated shares having a current offering price value of at least $10,000.
Lord Abbett prototype retirement plans have no such minimum. With respect to a
SWP for Class B shares, on redemptions over 12% per year, the CDSC will apply to
the entire redemption. Therefore, please contact the Fund for assistance in
minimizing the CDSC in this situation. With respect to Class C shares, the CDSC
will be waived on and after the first anniversary of their purchase. The SWP
involves the planned redemption of shares on a periodic basis by receiving
either fixed or variable amounts at periodic intervals. Since the value of
shares redeemed may be more or less than their cost, gain or loss may be
recognized for income tax purposes on each periodic payment. Normally, you may
not make regular investments at the same time you are receiving systematic
withdrawal payments because it is not in your interest to pay a sales charge on
new investments when in effect a portion of that new investment is soon
withdrawn. The minimum investment accepted while a withdrawal plan is in effect
is $1,000. The SWP may be terminated by you or by us at any time by written
notice.
RETIREMENT PLANS. The Prospectus indicates the types of retirement plans for
which Lord Abbett provides forms and explanations. Lord Abbett makes available
the retirement plan forms and custodial agreements for IRAs (Individual
Retirement Accounts, including Simple IRAs and Simplified Employee Pensions),
403(b) plans and qualified pension and profit-sharing plans, including 401(k)
plans. The forms name Investors Fiduciary Trust Company as custodian and contain
specific information about the plans. Explanations of the eligibility
requirements, annual custodial fees and allowable tax advantages and penalties
are set forth in the relevant plan documents. Adoption of any of these plans
should be on the advice of your legal counsel or qualified tax adviser.
<PAGE>
6.
PAST PERFORMANCE
The Fund computes the average annual compounded rate of total return during
specified periods that would equate the initial amount invested to the ending
redeemable value of such investment by adding one to the computed average annual
total return, raising the sum to a power equal to the number of years covered by
the computation and multiplying the result by one thousand dollars, which
represents a hypothetical initial investment. The calculation assumes deduction
of the maximum sales charge from the initial amount invested and reinvestment of
all income dividends and capital gains distributions on the reinvestment dates
at prices calculated as stated in the Prospectus. The ending redeemable value is
determined by assuming a complete redemption at the end of the period(s) covered
by the average annual total return computation.
In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% (as a percentage of the offering price) is deducted from the
initial investment (unless the return is shown at net asset value). For Class B
shares, the payment of the applicable CDSC (5.0% prior to the first anniversary
of purchase, 4.0% prior to the second anniversary of purchase, 3.0% prior to the
third and fourth anniversaries of purchase, 2.0% prior to the fifth anniversary
of purchase, 1.0% prior to the sixth anniversary of purchase and no CDSC on and
after the sixth anniversary of purchase) is applied to the Fund's investment
result for that class for the time period shown (unless the total return is
shown at net asset value). For Class C shares, the 1.0% CDSC is applied to the
Fund's investment result for that class for the time period shown prior to the
first anniversary of purchase (unless the total return is shown at net asset
value). Total returns also assume that all dividends and capital gains
distributions during the period are reinvested at net asset value per share, and
that the investment is redeemed at the end of the period.
Using the computation method described above, the Fund's average annual
compounded rates of total return for the last one, five and ten fiscal-years
ending on October 31, 1997 are as follows: 18.60%, 17.20% and 14.35% for the
Fund's Class A shares, respectively. For the period August 1, 1996 to October
31, 1996 the average annual compounded rates of total return for the Class B
shares was 4.64% (not annualized). For the fiscal year ending October 31, 1997
the annual compounded rates for Class B shares was 19.79%. For the period August
1, 1996 to October 31, 1996 the average annual compounded rates of total return
for Class C shares was 8.96% (not annualized). For the fiscal year ending
October 31, 1997 the annual compounded rates for Class C shares was 24.88%.
Our yield quotation for each class is based on a 30-day period ended on a
specified date, computed by dividing the net investment income per share earned
during the period by the maximum offering price per share of such class on the
last day of the period. This is determined by finding the following quotient:
take the dividends and interest earned during the period for a class minus its
expenses accrued for the period and divide by the product of (i) the average
daily number of Class shares outstanding during the period that were entitled to
receive dividends and (ii) the maximum offering price per share of such class on
the last day of the period. To this quotient add one. This sum is multiplied by
itself five times. Then one is subtracted from the product of this
multiplication and the remainder is multiplied by two. Yield for the Class A
shares reflects the deduction of the maximum initial sales charge, but may also
be shown based on the Class A net asset value per share. Yields for Class B and
C shares do not reflect the deduction of the CDSC. For the 30-day period ended
October 31, 1997, the yield for the Class A shares of Fund was 1.60%.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of a Fund investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Therefore, there is no assurance that this performance will be
repeated in the future.
7.
TAXES
The value of any shares redeemed by the Fund or repurchased or otherwise sold
may be more or less than your tax basis in the shares at the time the
redemption, repurchase or sale is made. Any gain or loss will generally be
taxable for federal income tax purposes. Any loss realized on the sale,
redemption or repurchase of Fund shares which you have held for six months or
less will be treated for tax purposes as a long-term capital loss to the extent
of any capital gains distributions which you received with respect to such
shares. Losses on the sale of stock or securities are not deductible if, within
a period beginning 30 days before the date of the sale and ending 30 days after
the date of the sale, the taxpayer acquires stock or securities that are
substantially identical.
<PAGE>
The writing of call options and other investment techniques and practices which
the Fund may utilize, as described above under "Investment Objectives and
Policies," may create "straddles" for United States federal income tax purposes
and may affect the character and timing of the recognition of gains and losses
by the Fund. Such transactions may increase the amount of short-term capital
gain realized by the Fund, which is taxed as ordinary income when distributed to
shareholders. Limitations imposed by the Internal Revenue Code on regulated
investment companies may restrict the Fund's ability to engage in transactions
in options.
As described in the Prospectus under "How We Invest - Risk Factors", the Fund
may be subject to foreign withholding taxes which would reduce the yield on its
investments. Tax treaties between certain countries and the United States may
reduce or eliminate such taxes. It is expected that Fund shareholders who are
subject to United States federal income tax will not be entitled to claim a
federal income tax credit or deduction for foreign income taxes paid by the
Fund.
The Fund will be subject to a 4% non-deductible excise tax on certain amounts
not distributed (and not treated as having been distributed) on a timely basis
in accordance with a calendar-year distribution requirement. The Fund intends to
distribute to shareholders each year an amount adequate to avoid the imposition
of such excise tax. Dividends paid by the Fund will qualify for the
dividends-received deduction for corporations to the extent they are derived
from dividends paid by domestic corporations.
Gains and losses realized by the Fund on certain transactions, including sales
of foreign debt securities and certain transactions involving foreign currency,
will be treated as ordinary income or loss for federal income tax purposes to
the extent, if any, that such gains or losses are attributable to changes in
exchange rates for foreign currencies. Accordingly, distributions taxable as
ordinary income will include the net amount, if any, of such foreign exchange
gains and will be reduced by the net amount, if any, of such foreign exchange
losses.
If the Fund purchases shares in certain foreign investment entities, called
"passive foreign investment companies" it may be subject to United States
federal income tax on a portion of any "excess distribution" or gain from the
disposition of such shares, even if such income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature of
interest may be imposed on either the Fund or its shareholders in respect of
deferred taxes arising from such distributions or gains.
If the Fund were to invest in a passive foreign investment company with respect
to which the Fund elected to make a "qualified electing fund" election, in lieu
of the foregoing requirements, the Fund might be required to include in income
each year a portion of the ordinary earnings and net capital gains of the
qualified electing fund, even if such amount were not distributed to the Fund.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to United States persons (United States citizens or residents and
United States domestic corporations, partnerships, trusts and estates.) Each
shareholder who is not a United States person should consult his tax adviser
regarding the U.S. and foreign tax consequences of the ownership of shares of
the Fund, including a 30% (or lower treaty rate) United States withholding tax
on dividends representing ordinary income and net short-term capital gains, and
the applicability of United States gift and estate taxes to non-United States
persons who own Fund shares.
8.
INFORMATION ABOUT THE FUND
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund trades in such security,
prohibiting profiting on trades of the same security within 60 days and trading
on material and non-public information. The Code imposes certain similar
requirements and restrictions on the independent directors and trustees of each
Lord Abbett-sponsored mutual fund to the extent contemplated by the
recommendations of such Advisory Group.
9.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended October 31, 1997 and the
report of Deloitte & Touche LLP, independent public accountants, on such
financial statements contained in the 1997 Annual Report to Shareholders of Lord
Abbett Affiliated Fund, Inc. are incorporated herein by reference to such
financial statements and report in reliance upon the authority of Deloitte &
Touche LLP as experts in auditing and accounting.
<PAGE>
PART C OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Part A- Financial Highlights for the ten years ended October
31, 1997.
Part B- Statement of Net Assets at October 31, 1997.
Statement of Operations for the year ended October
31, 1997. Statements of Changes in Net Assets for
the years ended October 31, 1996 and 1997. Financial
Highlights for the five years ended October 31, 1997.
(b) Exhibits -
99.B1 Articles of Incorporation and Articles Supplementary*
99.B2 By-laws*
99.B5 Management Agreement**
99.B6 Distribution Agreement***
99.B7 Equity-Based Plans for Non-Interested Person Directors
of Lord Abbett Funds****
99.B15 Forms of Rule 12b-1 Plans*****
* Filed herewith.
** Incorporated by reference to Post-Effective Amendment No. 8
to the Registration Statement on Form N-1A of Lord Abbett
Equity Fund, Inc. (File No. 811-6033).
*** Incorporated by reference to Post-Effective Amendment No. 10
to the Registration Statement on Form N-1A of Lord Abbett
Series Fund, Inc. (File No. 811-5876).
**** Incorporated by reference to Post-Effective Amendment No. 19
to the Registration Statement on Form N-1A of Lord Abbett
Securities Trust (File No. 811-7538).
***** Incorporated by reference to Post-Effective Amendment No. 12
to the Registration Statement on Form N-1A of Lord Abbett
Research Fund, Inc. (File No. 811-6650).
Exhibit items not listed above have either already been
filed or are not applicable.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
Item 26. NUMBER OF RECORD HOLDERS OF SECURITIES
As of February 20, 1998:
238,019 - (Class A)
16,168 - (Class B)
6,322 - (Class C)
Item 27. INDEMNIFICATION
Registrant is incorporated under the laws of the State of Maryland and
is subject to Section 2-418 of the Corporations and Associations
Article of the Annotated Code of the State of Maryland controlling the
indemnification of the directors and officers. Since Registrant has its
executive offices in the State of New York, and is qualified as a
foreign corporation doing business in such State, the persons covered
by the foregoing statute may also be entitled to and subject to the
limitations of the indemnification provisions of Section 721-726 of the
New York Business Corporation Law.
The general effect of these statutes is to protect officers, directors
and employees of Registrant against legal liability and expenses
incurred by reason of their positions with the Registrant. The statutes
provide for indemnification for liability for proceedings not brought
on behalf of the corporation and for those brought on behalf of the
corporation, and in each case place conditions under which
indemnification will be permitted, including requirements that the
officer, director or employee acted in good faith. Under certain
conditions, payment of expenses in advance of final disposition may be
permitted. The By-laws of Registrant, without limiting the authority of
Registrant to indemnify any of its officers, employees or agents to the
extent consistent with applicable law, make the indemnification of its
directors mandatory subject only to the conditions and limitations
imposed by the above- mentioned Section 2-418 of Maryland law and by
the provisions of Section 17(h) of the Investment Company Act of 1940
as interpreted and required to be implemented by SEC Release No.
IC-11330 of September 4, 1980.
In referring in its By-laws to, and making indemnification of directors
subject to the conditions and limitations of, both Section 2-418 of the
Maryland law and Section 17(h) of the Investment Company Act of 1940,
Registrant intends that conditions and limitations on the extent of the
indemnification of directors imposed by the provisions of either
Section 2-418 or Section 17(h) shall apply and that any inconsistency
between the two will be resolved by applying the provisions of said
Section 17(h) if the condition or limitation imposed by Section 17(h)
is the more stringent. In referring in its By-laws to SEC Release No.
IC-11330 as the source for interpretation and implementation of said
Section 17(h), Registrant understands that it would be required under
its By-laws to use reasonable and fair means in determining whether
indemnification of a director should be made and undertakes to use
either (1) a final decision on the merits by a court or other body
before whom the proceeding was brought that the person to be
indemnified ("indemnitee") was not liable to Registrant or to its
security holders by reason of willful malfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct
of his office ("disabling conduct") or (2) in the absence of such a
decision, a reasonable determination, based upon a review of the facts,
that the indemnitee was not liable by reason of such disabling conduct,
by (a) the vote of a majority of a quorum of directors who are neither
"interested persons" (as defined in the 1940 Act) of Registrant nor
parties to the proceeding, or (b) an independent legal counsel in a
written opinion. Also, Registrant will make advances of attorneys' fees
or other expenses incurred by a director in his defense only if (in
addition to his undertaking to repay the advance if he is not
ultimately entitled to indemnification) (1) the indemnitee provides a
security for his undertaking, (2) Registrant shall be insured against
losses arising by reason of any lawful advances, or (3) a majority of a
quorum of the non-interested, non-party directors of Registrant, or an
independent legal counsel in a written opinion, shall determine, based
on a review of readily available facts, that there is reason to believe
that the indemnitee ultimately will be found entitled to
indemnification.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expense incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
In addition, Registrant maintains a directors' and officers' errors and
omissions liability insurance policy protecting directors and officers
against liability for breach of duty, negligent act, error or omission
committed in their capacity as directors or officers. The policy
contains certain exclusions, among which is exclusion from coverage for
active or deliberate dishonest or fraudulent acts and exclusion for
fines or penalties imposed by law or other matters deemed uninsurable.
<PAGE>
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Lord, Abbett & Co. acts as investment adviser for twelve other open-end
investment companies (of which it is principal underwriter for
thirteen) and as investment adviser to approximately 5,757 private
accounts as of July 31, 1997. Other than acting as directors and/or
officers of open-end investment companies sponsored by Lord, Abbett &
Co., none of Lord, Abbett & Co.'s partners has, in the past two fiscal
years, engaged in any other business, profession, vocation or
employment of a substantial nature for his own account or in the
capacity of director, officer, employee, or partner of any entity
except as follows:
John J. Walsh
Trustee
The Brooklyn Hospital Center
100 Parkside Avenue
Brooklyn, N.Y.
Item 29.(a) PRINCIPAL UNDERWRITER
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett U.S. Government Money Market Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Tax-Free Income Trust
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Lord Abbett Research Fund, Inc.
INVESTMENT ADVISOR
American Skandia Trust (Lord Abbett Growth & Income Portfolio)
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
BUSINESS ADDRESS (1) WITH REGISTRANT
Robert S. Dow Chairman and President
Paul A. Hilstad Vice President & Secretary
Stephen I. Allen Vice President
Zane E. Brown Vice President
Daniel E. Carper Vice President
Daria L. Foster Vice President
W. Thomas Hudson, Jr. Executive Vice President
Robert G. Morris Vice President
Robert J. Noelke Vice President
E. Wayne Nordberg Vice President
John J. Walsh Vice President
The other general partner of Lord Abbett & Co. who is neither
an officer nor a director of the Registrant is Michael
McLaughlin.
(1) Each of the above has a principal business address:
767 Fifth Avenue, New York, NY 10153
(c) Not applicable
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Registrant maintains the records, required by Rules 31a - 1(a) and
(b), and 31a - 2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules 31a - 1(f)
and 31a - 2(e) at its main office.
Certain records such as cancelled stock certificates and
correspondence may be physically maintained at the main office of the
Registrant's Transfer Agent, Custodian, or Shareholder Servicing Agent
within the requirements of Rule 31a-3.
Item 31. MANAGEMENT SERVICES
(a) None
Item 32. UNDERTAKINGS
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
The registrant undertakes, if requested to do so by the holders of
at least 10% of the registrant's outstanding shares, to call a
meeting of shareholders for the purpose of voting upon the
question of removal of a director or directors and to assist in
communications with other shareholders as required by Section
16(c).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Registration Statement
and/or any amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on the
19th day of December 1997.
LORD ABBETT AFFILIATED FUND, INC.
By s/Robert S. Dow
-----------------------------
Robert S. Dow,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Chairman, President
s/Robert S. Dow and Director March 2, 1998
- ------------------------- ---------------------------- --------------------
Robert S. Dow (Title) (Date)
Vice President and
s/Keith F. O'Conner Chief Fiancial Officer March 2, 1998
- ------------------------- ---------------------------- --------------------
Keith F. O'Connor (Title) (Date)
s/E. Wayne Nordberg Director March 2, 1998
- ------------------------- ---------------------------- --------------------
E. Wayne Nordberg (Title) (Date)
s/Stewart S. Dixon Director March 2, 1998
- ------------------------- ---------------------------- --------------------
Stewart S. Dixon (Title) (Date)
s/John C. Jansing Director March 2, 1998
- ------------------------- ---------------------------- --------------------
John C. Jansing (Title) (Date)
s/C. Alan MacDonald Director March 2, 1998
- ------------------------- ---------------------------- --------------------
C. Alan MacDonald (Title) (Date)
s/Hansel B. Millican Director March 2, 1998
- ------------------------- ---------------------------- --------------------
Hansel B. Millican, Jr. (Title) (Date)
s/Thomas J. Neff Director March 2, 1998
- ------------------------- ---------------------------- --------------------
Thomas J. Neff (Title) (Date)
s/E. Thayer Bigelow Director March 2, 1998
- ------------------------- ---------------------------- --------------------
E. Thayer Bigelow (Title) (Date)
ARTICLES OF INCORPORATION
OF
AFFILIATED FUND, INC.
(A MARYLAND CORPORATION)
This is to Certify:
Article 1.
I, the subscriber, Kenneth B. Cutler, whose post office
address is 63 Wall Street, New York, New York 10005, being at least twenty-one
years of age, am acting as incorporator with the intention of forming a
corporation under and by virtue of the General Laws of the State of Maryland
authorizing the formation of corporations.
Article 2.
The name of the corporation (hereinafter called the
"Corporation") is Affiliated Fund, Inc.
Article 3.
The post office address of the place at which the principal
office of the Corporation in the State of Maryland will be located is c/o The
Prentice-Hall Corporation System, Maryland, 929 North Howard Street, Baltimore,
Maryland 21201.
The Corporation's resident agent is The Prentice-Hall
Corporation System, Maryland, 929 North Howard Street, Baltimore, Maryland
21201. Said resident agent is a corporation of the State of Maryland.
<PAGE>
Article 4.
The purpose or purposes for which the Corporation is formed
and the business or objects to be transacted, carried on and promoted by it, are
as follows:
1. To conduct, operate and carry on the business of an investment
company.
2. To engage in the business of investing in, acquiring, owning,
holding, selling and otherwise disposing of, or turning to account or realizing
upon, and generally dealing in and with, securities of, every kind (herein
sometimes collectively referred to as securities), including, without
limitation, shares of stocks and bonds, debentures, notes, evidences of
indebtedness and obligations secured or unsecured, evidences of interest,
warrants, part-paid receipts, allotment certificates and other securities of any
description irrespective of the form or descriptive name thereof, or the
identity, nature or form of the persons or entities by which they are issued or
created (hereinafter referred to as issuers); to exercise any and all rights,
powers and privileges of individual ownership or interest in respect of any and
all funds, property and securities owned by the corporation or in respect of
which the corporation is interested, including, without limitation, the right to
vote thereon, to consent and otherwise act with respect thereto and to do any
and all acts and things, including, without limitation, the payment of
assessments, subscriptions and other sums of money, the deposit of securities or
otherwise, for the preservation, protection, improvement or enhancement in value
of any and all such securities or the reorganization, rehabilitation, merger or
consolidation of any issuer; to exercise any option appertaining to any such
securities, including any option for the conversion thereof into, or the
exchange thereof for, other property, with or without making or receiving any
cash payment or commitment; and to acquire or become interested in any
securities irrespective of whether or not such securities be fully paid or
subject to further payments, and to make payment thereon or in respect thereof
as called for or in advance of calls or otherwise.
3. To issue, sell, repurchase, redeem, retire, cancel, acquire, resell,
transfer, and otherwise deal in shares of the capital stock of the Corporation,
and to apply to any such repurchase, redemption, retirement, cancellation or
acquisition of shares of capital stock of the Corporation, any funds of the
Corporation. whether capital, surplus or otherwise to the full extent permitted
by the laws of Maryland, all without the vote or consent of the stockholders of
the Corporation.
4. To conduct its business in the State of Maryland, all other states
and elsewhere in any part of the world, and to have one or more offices outside
the State of Maryland.
2
<PAGE>
5. To do any and all things herein set forth, and in addition such
other acts and things as are necessary or convenient to the attainment of the
purposes of this Corporation, or any of them, to the same extent as natural
persons lawfully might or could do in any part of the world, and to engage in
any lawful act or activity for which corporations may be organized under the
laws of the State or Maryland.
The foregoing objects and purposes shall, except as otherwise
expressly provided, be in no way limited or restricted by reference to,
or inference from the terms or any other clause of this or any other
Article of these Articles of Incorporation, and shall each be regarded
as independent, and construed as powers as well as objects and
purposes, and the enumeration of special purposes, objects and powers
shall not be construed to limit or restrict in any manner the meaning
of general terms or the general powers of the Corporation now or
hereafter conferred by the laws of the State of Maryland, nor shall the
expression of one thing be deemed to exclude another, though it be of
like nature, not expressed; PROVIDED, HOWEVER, that the Corporation
shall not have power to carry on within the State of Maryland any
business whatsoever the carrying on of which would preclude it from
being classified as an ordinary business corporation under the laws of
said State; nor shall it carry on any business, or exercise any powers,
in any other state, territory, district or county except to the extent
that the same may lawfully be carried on or exercised under the laws
thereof.
Article 5.
SECTION 1. The total number of shares which the Corporation
has authority to issue is 300,000,000 shares of capital stock of the par value
of one dollar and twenty-five cents ($1.25) each, all of one class, having an
aggregate par value of $375,000,000.
SECTION 2. Each share of the capital stock of the Corporation
shall be subject to the following provisions:
i. Allshares of the capital stock of the Corporation now or
hereafter authorized shall be subject to redemption and
redeemable at the option the stockholders, in the sense used in
the General Laws of the State of Maryland authorizing the
formation of corporations. Each holder of the capital stock of
the Corporation, upon request to the Corporation accompanied by
surrender (to the Corporation, or an agent designated by it) of
the appropriate stock certificate or certificates, if any, in
proper form for transfer, and such other instruments as the Board
of Directors may require, shall be entitled to require the
Corporation to redeem all or any part of the shares of capital
stock standing in the name of such holder on the books of the
Corporation, at a redemption price equal to the net asset value
of such shares determined as hereinafter set forth.
3
<PAGE>
ii. Notwithstanding the foregoing, the Board of Directors of the
Corporation may suspend the right of the holders of the capital
stock of the Corporation to require the Corporation to redeem
shares of such capital stock or may suspend any voluntary
purchase of such capital stock:
1. for any period (A) during which the New York Stock
Exchange is closed other than the customary weekend and
holiday closing, or (B) during which trading on the New York
Stock Exchange is restricted;
2. for any period during which an emergency, as
defined by the rules of the Securities and Exchange Commission
or any successor thereto, exists as a result of which (A)
disposal by the Corporation of securities owned by it is not
reasonably practicable, or (B) it is not reasonably
practicable for the Corporation fairly to determine the value
of its net assets; or
3. for such other periods as the Securities and
Exchange Commission or any successor thereto may by order
permit for the protection of securityholders of the
Corporation.
iii. The Corporation, pursuant to a resolution of the Board of
Directors and without the vote or consent of stockholders of the
Corporation. shall have the right to redeem at net asset value
all shares of capital stock in any stockholder account in which
there are fewer than 20 shares or such fewer shares as shall be
specified in such resolution. Such resolution shall set forth
that redemption of shares in such accounts has been determined to
be in the economic best interest of the Corporation or necessary
to reduce disproportionately burdensome expenses in servicing
stockholder accounts. Such resolution shall provide that prior
notice of at least six months shall be given to a stockholder
before such redemption of shares, and that the stockholder will
have six months (or such longer period as is specified in the
resolution) from the date of the notice to avoid such redemption
by increasing his account to at least 20 shares, or such fewer
shares as is specified in the resolution.
SECTION 3. Notwithstanding any provision of law requiring that
any action be taken or authorized by the affirmative vote of the holders of a
designated proportion greater than a majority of the shares or votes entitled to
be cast, such action shall be effective and valid if taken or authorized by the
affirmative vote of the holders of a majority of the total number or shares
outstanding and entitled to vote thereon.
SECTION 4. No holder of stock of the Corporation shall, as
such holder, have any right to purchase or subscribe for any shares of the
4
<PAGE>
capital stock of the Corporation of any class which it may issue or sell
(whether out of the number of shares now or hereafter authorized by these
Articles of Incorporation, or any amendment thereof, or out of any shares of the
capital stock of the Corporation acquired by it after the issue thereof, or
otherwise) other than such right, if any, as the Board of Directors, in its
discretion, may determine.
Article 6.
The initial number of directors of the Corporation shall be
eight, and the names of those who shall act as such until the first annual
meeting or until their successors are duly elected and qualify are as follows:
Alvin H. Berndt
Robert S. Driscoll
Paul M. Fye
Carl W. Knobloch
Noel B. McLean
James H. Potter
R. Patterson Warlick
Paul Windels, Jr.
However, the by-laws of the Corporation may fix the number of directors at a
number other than eight and may authorize the Board of Directors, by the vote of
a majority of the entire Board of Directors, to divide the Board into classes,
to increase or decrease the number or directors within a limit specified in the
by-laws. provided that in no case shall the number or directors be fewer than
five and to fill the vacancies created by any such increase in the number of
directors. Unless otherwise provided in the by-laws of the Corporation, the
directors of the Corporation need not be stockholders.
Article 7.
The following provisions are inserted for the management of
the business and conduct of the affairs of the Corporation, and to create,
define, limit and regulate the powers of the Corporation, the directors and the
stockholders.
SECTION 1. In furtherance and not in limitation of the powers
conferred by statute and pursuant to these Articles of Incorporation, the Board
of Directors is expressly authorized to do the following:
5
<PAGE>
1. To make, adopt, alter, amend and repeal by-laws of the
Corporation;
2. To distribute, in its discretion, for any fiscal year (in the
year or in the next fiscal year) as ordinary dividends and as
capital gains distributions, respectively, amounts sufficient to
enable the Corporation as a regulated investment company to avoid
any liability for Federal income tax in respect of such year. Any
distribution or dividend paid to stockholders from any capital
source shall be accompanied by a written statement showing the
source or sources of such payment. Anything in these Articles of
Incorporation to the contrary notwithstanding, the Board of
Directors may at any time declare and distribute pro rata among
the stockholders, as of a fixed record date, a stock dividend out
of either authorized but unissued or treasury shares of the
Corporation, or both;
3. To issue and sell or to cause the issuance and sale of shares of
the Corporation's capital stock in such amounts and in such terms
and conditions for such purpose and for such amount or kind of
consideration as is now or hereafter permitted by the laws of the
State of Maryland;
4. To purchase and to cause to be purchased shares of the capital
stock of the Corporation, pursuant to these Articles of
Incorporation, upon tender thereof by the holder or holders
thereof or otherwise, provided the Corporation has assets legally
available for such purpose whether arising out of paid-in
surplus, other surplus, net profits or otherwise, to such extent
and in such manner and upon such terms as the Board of Directors
shall deem expedient, and to pay for such shares in cash then
held or owned by the Corporation;
5. To authorize, subject to such vote, consent, or approval of
stockholders and other conditions, if any, as may be required by
any lawfully applicable statute, rule or regulation, the
execution and performance by the Corporation of an agreement or
agreements with any corporation, association or partnership
whereby (A) subject to the supervision and control of the Board
of Directors, any such other corporation, association or
partnership shall render managerial, investment advisory and
related services to the Corporation (including, if deemed
advisable. the management or supervision of the investment
portfolio of the Corporation) upon such terms and conditions as
may be provided in such agreement or agreements, and (B) the
other party to any such agreement or agreements shall pay the
salaries or fees of the directors and executives of the
Corporation, rental for office space, office hire and ordinary
office expenses, and such clerical services as relate to
research, statistical and investment work; PROVIDED, HOWEVER,
that the aggregate compensation paid for such services and
expenses in any calendar month shall not exceed one-twenty-fourth
of one per cent (1/24th of 1%) of the average net assets for such
month, as determined by the board of directors of the
corporation;
6
<PAGE>
6. To authorize, subject to such vote, consent or approval of
stockholders and other conditions, if any, as may be required by
any applicable statute, rule or regulation, the execution and
performance by the Corporation of an agreement or agreements,
which may be exclusive, with any person, corporation,
association, partnership or other organization, as distributor,
providing for the sale and distribution of shares of the capital
stock of the Corporation. Such agreement or agreements may
provide for the charge by the Corporation of a premium over the
net asset value (determined as hereinafter provided) of such
shares and allowance of a discount by the Corporation to such
distributor, and may further provide for the reallowance by such
distributor of concessions or commissions from such discount;
PROVIDED, HOWEVER, that such discount shall not exceed the amount
of the premium;
7. To authorize any agreement of the character described in section
(e) or (f) of this Section 1 or other agreement or transaction
with any person, corporation, association, partnership or other
organization, although one or more of the members of the Board of
Directors or officers of the Corporation may be the other party
to any such agreement or transaction or an officer, director,
shareholder, or member of such other party, and no such agreement
or transaction shall be invalidated or rendered voidable by
reason of the existence of any such relationship. Any director of
the Corporation who is also an officer, director, shareholder, or
member of such other party or who is so interested may be counted
in determining the existence of a quorum at any meeting of the
Board of Directors which shall authorize any such agreement or
transaction, and may vote thereat to authorize any such agreement
or transaction, with like force and effect as if he were not such
officer, director, shareholder, or member of such other party or
not so interested. Any agreement entered into pursuant to said
sub-section (c) or (f), shall be consistent with and subject to
the requirements of Section 15 of the Investment Company Act of
1940 (including any amendment thereof or other applicable Act of
Congress hereafter enacted), and no amendment to any agreement
entered into pursuant to said subsection (e) (other than an
amendment reducing the compensation of the other party thereto)
shall he effective unless assented to by the affirmative vote of
a majority of the outstanding voting securities of the
Corporation, as such phrase is defined in the Investment Company
Act of 1940.
SECTION 2. The Board of Directors may authorize the purchase
by the Corporation, either directly or through an agent, of shares of its
7
<PAGE>
capital stock in the open market or otherwise, at prices not in excess of the
net asset value of such shares (determined as hereinafter provided) as of a time
determined by the Board of Directors reasonably approximate to the time of
purchase by the Corporation or any such agent.
SECTION 3. For the purposes referred to in these Articles of
Incorporation, the net asset value of shares of the capital stock of the
Corporation as of any particular time shall be determined by or pursuant to the
direction of the Board of Directors as follows:
1.The net asset value of each share of such stock at any
particular time shall be the quotient, carried out to not less
than three decimal points, obtained by dividing the net value
of the assets of the Corporation (determined as hereinafter
provided) as of such determination time by the total number of
shares then issued or issuable, including all shares which the
Corporation has agreed to sell for which the price has been
determined, and excluding shares which have been surrendered
to the Corporation or an agent and which the Corporation has
agreed to purchase, for which the price has been determined.
The net value of the assets of the Corporation as of any such
determination time shall be determined in accordance with
sound accounting practice by deducting from the gross value of
the assets of the Corporation (determined as hereinafter
provided) at such time the amount of all liabilities,
including expenses incurred and accrued and unpaid, such
reserves as may be set up to cover taxes and any other
liabilities, and such other deductions as in the opinion of
the Board of Directors of the Corporation are in accordance
with sound accounting practice.
The gross value of the assets of the Corporation at any such
determination time shall be an amount equal to all cash,
receivables, the market value of all securities and the fair
value of other assets held by the Corporation at such
determination time, all determined in accordance with sound
accounting practice and giving effect to the following:
(l) the market value as of any such determination
time of any security owned by the Corporation which is listed
or admitted to trading privileges on the New York Stock
Exchange or the American Stock Exchange shall be the last sale
price or (in the case of a security in which there has been to
previously reported sale transaction since the last
determination time) the mean between the last bid price and
the last asked price, for such security on such exchange. In
case securities being valued are listed or admitted to trading
privileges on any securities exchange other than the New York
Stock Exchange or the American Stock Exchange, the securities
exchange, sale transactions or bid or asked prices which are
to be used as aforesaid, shall be selected by the Board of
Directors or any officer or other person designated by the
Board of Directors for the purpose.
8
<PAGE>
(2) The market value of securities dealt in in an
over-the-counter market shall be the mean between the last bid
and asked price in such market prior to such determination
time.
(3) The market value of other property, including any
securities which are neither listed nor admitted to trading
privileges on any exchange or dealt in in an over-the-counter
market shall be determined in good faith in such manner as the
Board of Directors shall prescribe from time to time.
(4) The determination of the market value of
securities hereunder may be made in reliance on any recognized
source of quotations or basis for ascertaining quotations.
2.The Board of Directors is empowered, in its discretion, to
establish other methods for determining such net asset value
whenever such other methods are deemed by it to be necessary
or desirable, including, but without limiting the generality
of the foregoing, any method deemed necessary or desirable in
order to enable the Corporation to comply with any provision
of the Investment Company Act of 1940 or any rule or
regulation thereunder.
SECTION 4. Any determination as to any of the following
matters made by or pursuant to the direction of the Board of Directors
consistent with these Articles of Incorporation and in the absence of willful
misfeasance, had faith, gross negligence or reckless disregard of duties, shall
be final and conclusive and shall be binding upon the Corporation and every
holder of shares of its capital stock, namely, the amount or the assets,
obligations, liabilities and expenses of the Corporation; the amount of the net
income of the Corporation from dividends and interest for any period and the
amount of assets at any time legally available for the payment of dividends; the
amount of paid-in surplus, other surplus, annual or other net profits, or net
assets in excess of capital, undivided profits, or excess of profits over losses
on sales of securities; the amount, purpose, time of creation, increase or
decrease, alteration or cancellation of any reserves or charges and the
propriety thereof (whether or not any obligation or liability for which such
reserves or charges shall have been created shall have been paid or discharged);
the market value, or any sale, bid or asked price to be applied in determining
the market value, of any security owned or held by the Corporation; the fair
value of any other asset owned by the Corporation; the number of shares of the
Corporation issued or issuable; the existence of conditions permitting the
postponement of payment of the repurchase price of shares of capital stock of
the Corporation or the suspension of the right of redemption is provided by law;
any matter relating to the acquisition, holding and disposition of securities
9
<PAGE>
and other assets by the Corporation; any question as to whether any transaction
constitutes a purchase of securities on margin, a short sale of securities, or
an underwriting of the sale of, or participation in any underwriting or selling
group in connection with the public distribution of any securities; and any
matter relating to the issue, sale, repurchase and/or other acquisition or
disposition of shares of capital stock of the Corporation.
SECTION 5. Any director, or any officer elected or appointed
by the Board of Directors, or by any committee of said board, or by the
stockholders or otherwise, may be removed at any time, with or without cause, in
such lawful manner as may be provided in the by-laws of the corporation.
SECTION 6. The consideration (or the value thereof as
determined by the Board of Directors) per share to be received by the
Corporation upon the issuance or sale of any shares of its capital stock
(including treasury shares) shall not be less than the greater of the par value
or the asset value (determined as provided in Section 3 of this Article) per
share of such capital stock outstanding at the time as of which the computation
of such asset value shall be made (such time to be determined by the Board of
Directors and being hereinafter referred to as a Determination Time), and that
no shares of such capital stock shall be issued or sold in contravention of any
statute, rule or regulation which at the time shall be lawfully applicable to
the corporation.
Article 8.
From time to time any of the provisions of these Articles of
Incorporation may be amended, altered or repealed (including any amendment that
changes the terms of any of the outstanding stock by classification,
reclassification or otherwise), and other provisions that might, under the
statutes of the State of Maryland at the time in force, be lawfully contained in
articles of incorporation may be added or inserted, upon the vote of the holders
of a majority of the shares of capital stock of the Corporation at the time
outstanding and entitled to vote, and all rights at any time conferred upon the
stockholders of the Corporation by these Articles of Incorporation are subject
to the provisions of this Article VIII.
IN WITNESS WHEREOF, I have signed these ARTICLES OF
INCORPORATION on this 24th day of November, 1975, and acknowledge the same to be
my act.
/S/KENNETH B. CUTLER
Kenneth B. Cutler
10
<PAGE>
AGREEMENT AND ARTICLES OF MERGER
AGREEMENT AND ARTICLES OF MERGER dated as of this 26th day of
November, 1975 by and between Affiliated Fund, Inc., a Maryland corporation
(hereinafter sometimes called "Maryland Corporation" or the "Surviving
Corporation"), and Affiliated Fund, Inc., a Delaware corporation (hereinafter
sometimes called "Delaware Corporation"), said corporations being hereinafter
sometimes collectively called the "Constituent Corporations" (hereinafter
sometimes called "this Agreement").
WHEREAS, Maryland Corporation is a corporation duly organized
and existing under the General Corporation Law of the State of Maryland, having
been incorporated on November 26, 1975, and has authorized capital stock
consisting of 300,000,000 common shares, par value of $1.25 per share, of which
10 shares were issued and outstanding on the date hereof; and
WHEREAS, Delaware Corporation is a corporation duly organized
and existing under the laws of the State of Delaware, having been incorporated
on September 19, 1932 under the General Corporation Law of the State of Delaware
and has authorized capital stock consisting of 300,000,000 shares of common
stock, $1.25 par value, of which 213,826,917.48 were issued and outstanding
(excluding treasury shares) on the date hereof; and
WHEREAS, the principal office of Maryland Corporation in the
State or Maryland is located at c/o Prentice-Hall Corporation System, Maryland,
929 North Howard Street, Baltimore, Maryland 21201.
WHEREAS, the principal office of Delaware Corporation in the
State of Delaware is located at 229 South State Street in the City of Dover,
County of Kent; and
WHEREAS, the Board of Directors of each of the Constituent
Corporations has adopted this Agreement as a Plan of Reorganization intended to
qualify as such under the provisions of Section 368(a)(1)(F) of the Internal
Revenue Code of 1954, as amended, and the Constituent Corporations and their
respective Boards of Directors deem it advisable and to the advantage of the
Constituent Corporations and the respective stockholders that Delaware
Corporation be merged into Maryland Corporation with Maryland Corporation the
Surviving Corporation, under and pursuant to the laws of the States of Delaware
and Maryland and on the terms and conditions herein contained;
WHEREAS, the Board of Directors and sole stockholder of
Maryland Corporation and the Board of Directors of Delaware Corporation have
<PAGE>
approved this Agreement by resolutions duly adopted, and the Board of Directors
of Delaware Corporation has directed that this Agreement be submitted to its
stockholders for their approval;
NOW THEREFORE, in consideration or the premises and of mutual
agreements, covenants and provisions hereinafter contained, the parties hereto
agree:
Article I
1.1 Delaware Corporation and Maryland Corporation agree that
Delaware Corporation shall be merged into Maryland Corporation. Maryland
Corporation shall be the Surviving Corporation and shall be governed by the laws
of the State of Maryland. The terms and conditions of the merger and the mode of
carrying the same into effect are as herein set forth in the Agreement.
1.2 The Articles of Incorporation of Maryland Corporation as
they shall exist on the effective date of the merger shall, until further
amended as provided by law, constitute the Articles of Incorporation of the
Surviving Corporation.
1.3 The by-laws of Maryland Corporation as they exist on the
effective date of the merger shall, until further amended as provided by law,
constitute the by-laws of the Surviving Corporation.
1.4 The Directors of Delaware Corporation on the effective
date of the merger, shall constitute the Board of Directors of the Surviving
Corporation and shall hold office until the terms of their respective classes
expire at the annual meeting of stockholders of the Surviving Corporation in
1977, 1978, and 1979 and until their successors are elected and shall qualify.
1.5 Haskins & Sells shall continue as independent accountants
to report upon the financial condition of the Surviving Corporation for the
fiscal year ending October 31, 1976, provided such appointment of Haskins &
Sells is approved by the stockholders of Delaware Corporation.
1.6 Lord, Abbett & Co. shall continue to serve as investment
adviser to Maryland Corporation pursuant to the terms of the management
agreement dated February 4, 1949, as amended.
1.7 Lord, Abbett & Co. shall continue to serve as distributor
to Maryland Corporation under the terms of the distribution contract dated
February 4, 1949.
<PAGE>
Article II
2.1 The manner and basis of converting the issued and
outstanding shares of the common stock of Delaware Corporation into the shares
of common stock of the Surviving Corporation shall be as hereinafter set forth
in this Article II.
2.2 Each share or fraction thereof of common stock of Delaware
Corporation issued and outstanding on the effective date of the merger
(excluding any treasury shares of Delaware Corporation which shares shall cease
to exist) shall thereupon be converted into an equal number of whole and
fractional shares of common stock of the Surviving Corporation, and each
certificate representing shares of Delaware Corporation shall represent the same
number of shares of Maryland Corporation subject to the right of each holder of
a stock certificate representing shares of Delaware Corporation to surrender the
same to the Surviving Corporation and to receive in exchange a certificate
representing an equal number of shares of common stock of the Surviving
Corporation.
2.3 Each share of common stock of Maryland Corporation
outstanding on the effective date of the merger shall be canceled and retired
and the capital of the Maryland Corporation shall be reduced accordingly.
Article III
3.1 On the effective date of the merger provided for in this
Agreement, the separate existence of Delaware Corporation shall cease, except to
the extent, if any, continued by statute. All the assets, rights, privileges,
powers and franchises of Delaware Corporation and all debts due on whatever
account to it shall be taken and deemed to be transferred to and vested in the
Surviving Corporation without further act or deed; and all such assets, rights,
privileges, powers and franchises, and all and every other interest of Delaware
Corporation shall be thereafter as effectually the property of the Surviving
Corporation as they were of Delaware Corporation; and the title to and interest
in any real estate vested by deed, lease or otherwise, unto either of the
Constituent Corporations, shall not revert or be in any way impaired. The
Surviving Corporation shall be responsible for all the liabilities and
obligations of Delaware Corporation but the liabilities of the Constituent
Corporations or of their stockholders, directors, or officers shall not be
affected by this merger, nor shall the rights of the creditors thereof or any
persons dealing with such corporations, or any liens upon the property of such
corporations, be impaired by this merger, and any claim existing or action or
proceeding pending by or against either of such corporations may be prosecuted
to judgment as if this merger had not taken place, or the Surviving Corporation
may be proceeded against or substituted in place of Delaware Corporation. Except
as otherwise specifically set forth in this Agreement, the identity, existence,
purposes, powers, franchise, rights, immunities and liabilities of Maryland
Corporation shall continue unaffected and unimpaired by the merger.
<PAGE>
3.2 All corporate acts, plans, policies, resolutions,
approvals and authorizations of the shareholders, Board of Directors, committees
of the Board of Directors and agents of Delaware Corporation, which were
effective immediately prior to the effective date of the merger shall be taken
for all purposes as the acts, plans, policies, resolutions, approvals and
authorizations of the surviving corporation and shall be as effective and
binding thereon as the same were with respect to Delaware Corporation.
3.3 Prior to the effective date of the merger the Constituent
Corporations shall take all such action as shall be necessary or appropriate in
order to effectuate the merger. In case at any time after the effective date of
the merger the Surviving Corporation shall determine that any further
conveyance, assignment or other documents or any further action is necessary or
desirable to vest in or confirm to the Surviving Corporation full title to all
the properties, assets, rights, privileges, and franchises of the Constituent
Corporations, the officers and directors of the Constituent Corporations, at the
expense of the Surviving Corporation, shall execute and deliver all such
instruments and take all such action as the Surviving Corporation may determine
to be necessary or desirable in order to vest in and confirm to the Surviving
Corporation title to and possession of all such cash and securities and other
properties, assets, rights, privileges and franchises, and otherwise to carry
out the purpose of this Agreement.
3.4 The Surviving Corporation hereby (1) agrees that it may be
served with process in the State of Delaware in any proceeding for the
enforcement of any obligation of Delaware Corporation as well as for enforcement
of any obligation of the Surviving Corporation arising from the merger herein
provided, including any suit or proceedings to enforce the right, if any, of any
stockholder as determined in appraisal proceedings pursuant to the provisions of
Section 262 of the General Corporation Law of the State of Delaware, (2) hereby
irrevocably appoints the Secretary of State of the State of Delaware as its
agent to accept service of process in any such suit or other proceedings, and
(3) hereby specifies the following as the address to which a copy of such
process shall be mailed by the Secretary of State of the State of Delaware: Mr.
Kenneth B. Cutler, Secretary, Affiliated Fund, Inc., 63 Wall St., New York, New
York 10005.
Article IV
4.1 This Agreement shall become effective as of the close of
business on the date all of the following conditions have been met:
<PAGE>
(a) The holders of at least a majority of the outstanding
shares of common stock of Delaware Corporation shall have voted in
favor of the adoption of this Agreement and the merger contemplated
hereby at an annual or special meeting, or any adjournment thereof;
(b) The Securities and Exchange Commission shall not have
issued an unfavorable advisory report under Section 25(b) of the
Investment Company Act of 1940 nor instituted any proceeding seeking to
enjoin consummation of the merger under Section 25(c) of such Act;
(c) There shall have been received an opinion of counsel to the
effect that:
(l) the merger of Delaware Corporation into Maryland
Corporation will qualify as a reorganization within the
meaning of section 368(a)(1)(F) of the Internal Revenue Code
of 1954, as amended. Each of the Constituent Corporations will
be a party to the reorganization within the meaning of section
368(b);
(2) no gain or loss will be recognized to Delaware
Corporation upon the transfer of its assets to, and the
assumption of its liabilities by, Maryland Corporation;
(3) the basis of the assets of Delaware Corporation
received by Maryland Corporation will be the same as the basis
of such assets in the hands of Delaware Corporation
immediately prior to the merger;
(4) the holding period of the assets of Delaware
Corporation received by Maryland Corporation will include the
period during which such assets were held by Delaware
Corporation;
(5) no gain or loss will be recognized to Maryland
Corporation upon the receipt of assets of Delaware
Corporation;
(6) no gain or loss will be recognized to the
stockholders of Delaware Corporation upon receipt of common
stock of the Surviving Corporation as a consequence of tile
merger;
(7) the basis of the shares of the Surviving
Corporation received by stockholders of Delaware Corporation
will be the same as the basis of the shares of Delaware
Corporation surrendered by such stockholders;
<PAGE>
(8) the holding period of the shares of the Surviving
Corporation received by stockholders of Delaware Corporation
will include the holding period of such shares of common stock
of Delaware Corporation as are surrendered by such
stockholders, provided that such shares of Delaware
Corporation were held as are capital asset on the effective
date of merger; and
(9) the accumulated earnings and profits of Delaware
Corporation will become earnings and profits of Maryland
Corporation available for the subsequent distribution of
dividends within the meaning of section 316;
(d) This Agreement shall have been duly accepted for recording
with tile State Department of Assessments and Taxation of Maryland
under the General Corporation Law of Maryland, and this Agreement, duly
approved, adopted, certified, executed, sealed of the day and year
first above written. When the stockholders of Delaware Corporation
shall have voted for the adoption of this Agreement such fact shall be
certified on the Agreement by the Secretary or Assistant Secretary of
each such corporation under the seal thereof and this Agreement shall
then be re-executed and acknowledged on behalf of each such corporation
in accordance with this Agreement.
ATTEST: AFFILIATED FUND, INC.
a Delaware Corporation
/S/ KENNETH B. CUTLER
Secretary BY:/S/ROBERT S. DRISCOLL
(Corporate Seal) President
ATTEST: AFFILIATED FUND, INC.
a Maryland Corporation
/S/
Secretary BY:/S/ALVIN H. BERNDT
(Corporate Seal) Vice President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 26th day of November, 1975, before me personally came
Robert S. Driscoll, President of Affiliated Fund, Inc., a Delaware Corporation,
and Alvin H. Berndt, Vice President of Affiliated Fund, Inc., a Maryland
Corporation, who duly signed the foregoing instrument before me and each
acknowledged that such instrument as executed is the act and deed of that
corporation for which he acted, that his signing of such instrument on behalf of
such corporation is his act and deed, and that the facts stated therein are
true.
GIVEN under my hand on 26th day of November, 1975
(Notarial Seal)
/S/ MINNIE J. GIGANTE
Notary Public
<PAGE>
CERTIFICATE OF SECRETARY OF
AFFILIATED FUND, INC.
(A DELAWARE CORPORATION)
The undersigned, being the Secretary of Affiliated Fund, Inc.
(a Delaware Corporation), does hereby certify that on February 11, 1976, the
foregoing Agreement and Articles of Merger was submitted to the stockholders
entitled to vote of said corporation at the annual meeting thereof for the
purpose of acting on the Agreement and Articles of Merger. Due notice of the
time, place, and purpose of said meeting was mailed to each stockholder of said
corporation at least 20 days prior to the date of the meeting. At said meeting,
the Agreement and Articles of Merger was considered by the stockholders entitled
to vote of the corporation, and, a vote having been taken for the adoption or
rejection by them of the Agreement and Articles of Merger, at least a majority
of the outstanding stock entitled to vote of the corporation was voted for the
adoption of the Agreement and Articles of Merger.
/S/KENNETH B. CUTLER
Kenneth B. Cutler
Secretary of Affiliated Fund, Inc.
(a Delaware Corporation)
<PAGE>
The parties hereto hereby re-execute the Agreement and
Articles of Merger on this 12th day of February 1976.
ATTEST: AFFILIATED FUND, INC.
(a Delaware Corporation)
_____________________________ BY:/S/KENNETH B. CUTLER
Assistant Secretary Vice President
ATTEST: AFFILIATED FUND, INC.
(a Maryland Corporation)
_____________________________ BY:/S/KENNETH B. CUTLER
Assistant Secretary Vice President
<PAGE>
ARTICLES OF AMENDMENT
of
ARTICLES OF INCORPORATION
of
AFFILIATED FUND, INC.
AFFILIATED FUND, INC., a Maryland corporation having its
principal office in Baltimore City, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by
striking out Section 1(e) of ARTICLE VII and inserting in lieu
thereof the following:
"(c) To authorize, subject to such vote, consent, or
approval of stockholders and other conditions, if any, as may
be required by any lawfully applicable statute, rule or
regulation, the execution and performance by the Corporation
of an agreement or agreements with any corporation,
association or partnership whereby (A) subject to the
supervision and control of the Board of Directors, any such
other corporation, association or partnership shall render
managerial, investment advisory and related services to the
Corporation (including, if deemed advisable, the management or
supervision of the investment portfolio of the Corporation)
upon such terms and conditions as may be provided in such
agreement or agreements, and (B) the other party to any such
agreement or agreements shall pay the salaries or fees of the
executives of the Corporation, rental for office space, office
hire and ordinary office expenses, and such clerical services
as relate to research statistical and investment work;
PROVIDED, HOWEVER, that the aggregate compensation paid for
such services and expenses in any calendar month shall not
exceed one-twenty-fourth of one percent (1/24th of 1%) of the
average net assets for such month, as determined by the Board
of Directors of the Corporation";
SECOND: The Board of Directors of the Corporation, at a
meeting duly convened and held on December 14, 1977, duly adopted a
resolution in which was set forth the foregoing amendment to the
charter, declaring that the said amendment to the charter as proposed
was advisable and directing that it be submitted for action thereon to
the holders of all of the outstanding Capital Stock of the Corporation
at the annual meeting of stockholders to be held on February 8, 1978.
<PAGE>
THIRD: Notice setting forth said charter amendment and stating
that a purpose of the meeting of the stockholders would be to take
action thereon was given, is required by law, to the holders of all the
outstanding Capital Stock of the Corporation entitled to be cast. The
amendment of the charter of the Corporation as hereinabove set forth
was duly approved by the Stockholders of the Corporation at said
meeting by the affirmative vote of the holders of a majority of the
outstanding shares of the Corporation entitled to be cast, this being
the vote required by the Corporation's Articles of Incorporation for an
amendment.
FOURTH: The amendment of the charter of the Corporation as
hereinabove set forth has been duly advised by the Board of Directors
and approved by the holders of the Capital Stock of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused these presents
to be signed in its name and on its behalf its President and attested by its
Secretary on August 17, 1978.
ATTEST: AFFILIATED FUND, INC.
(a Delaware Corporation)
/S/KENNETH B. CUTLER BY:/S/JOHN M. MCCARTHY
Kenneth B. Cutler John M. McCarthy
Secretary President
<PAGE>
THE UNDERSIGNED, President of AFFILIATED FUND, INC., who
executed on behalf of said Corporation the foregoing Articles of Amendment, of
which this certificate is made a part, hereby acknowledges, in the name and on
behalf of said Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.
/S/JOHN M. MCCARTHY
John M. McCarthy
President
<PAGE>
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
AFFILIATED FUND, INC.
AFFILIATED FUND, INC., a Maryland corporation having its
principal office in Baltimore City, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Corporation filed its original Articles of
Incorporation with the State Department of Assessment and Taxation on
November 26, 1975.
SECOND: The Articles of Incorporation of the Corporation are
hereby amended to increase the authorized number of shares of capital
stock of the Corporation by striking out Section 1 of ARTICLE V and
inserting in lieu thereof the following:
"ARTICLE V
SECTION 1. The total number of shares which the Corporation
has authority to issue is 500,000,000 shares of capital stock of the
par value of one dollar and twenty-five cents ($1.25) each, all of one
class, having an aggregate par value of $625,000,000".
THIRD: The Board of Directors of the Corporation, at a meeting
duly convened and held on October 15, 1986 duly adopted resolutions in
which were set forth the foregoing amendments, declaring that the said
amendment was advisable and directing that it be submitted to the vote
of the holders of the outstanding capital stock of the Corporation
entitled to vote at a special meeting of stockholders to be held on
November 19, 1986.
<PAGE>
FOURTH: Notice setting forth said amendment and stating that
the purpose of the meeting of the stockholders would be to take action
thereon was given, as required by law, to the holders of all the
outstanding capital stock of the Corporation entitled to vote. Said
amendment was duly approved by the stockholders of the Corporation at
said meeting by the affirmative vote of the holders of a majority of
the outstanding shares of the Corporation entitled to vote, all in
accordance with the requirement of the Corporation's Articles of
Incorporation for approval of such amendment.
FIFTH: Prior to the Amendment, 300,000,000 shares of capital
stock, one dollar and twenty-five cents ($1.25) par value, having an
aggregate par value of $375,000,000, all of one class, were authorized
to be issued by the Corporation; as amended, 500,000,000 shares of
capital stock, one dollar ($1.25) par value, having an aggregate par
value of $625,000,000, all of one class, are authorized to be issued by
the Corporation.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these presents
to be signed in its name and on its behalf by its President and attested by its
Secretary on November 20, 1986.
AFFILIATED FUND, INC.
BY: /S/RONALD P. LYNCH
Ronald P. Lynch
President
ATTEST:
/S/KENNETH B. CUTLER
Kenneth B. Cutler
Secretary
<PAGE>
THE UNDERSIGNED, President of AFFILIATED FUND, INC., who
executed on behalf of said Corporation the foregoing Articles of Amendment, of
which this certificate is made a part, hereby acknowledges, in the name and on
behalf of said Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof, are true in all material respects, under the
penalties of perjury.
AFFILIATED FUND, INC.
BY: /S/RONALD P. LYNCH
Ronald P. Lynch
President
<PAGE>
ARTICLES OF
OF
ARTICLES OF INCORPORATION
OF
AFFILIATED FUND, INC.
AFFILIATED FUND, INC., a Maryland corporation having its
principal office in Baltimore City, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Corporation filed its original Articles of
Incorporation with the State Department of Assessment and Taxation on
November 26, 1975.
SECOND: The Articles of Incorporation of the Corporation are
hereby amended to permit a redemption fee of up to 1% of net asset
value by charging the last clause in Section 2(a) of Article V to read
as follows:
"at a redemption price equal to the net asset value of such
shares determined as hereinafter set forth, less a charge, not
to exceed one percent (1%) of such net asset value, if and as
fixed by resolution of the Board of Directors of the
Corporation from time to time."
THIRD: The Board of Directors of the Corporation, at a meeting
duly convened and held on January 10, 1990, duly adopted a resolution
in which was set forth the foregoing amendment, declaring that the said
amendment was advisable and directing that it be submitted to the vote
of the holders of the outstanding capital stock of the Corporation
entitled to vote at the annual meeting of stockholders to be held on
May 16, 1990.
<PAGE>
FOURTH: Notice setting forth said amendment and stating that a
purpose of the meeting of the stockholders would be to take action
thereon was given, as required by law, to the holders of all the
outstanding capital stock of the Corporation entitled to vote. Said
amendment was duly approved by the stockholders of the Corporation at
said meeting by the affirmative vote of the holders of a majority of
the outstanding shares of the Corporation entitled to vote, all in
accordance with the requirement of the Corporation's Articles of
Incorporation for approval of such an amendment.
IN WITNESS WHEREOF, the Corporation has caused these presents
to be signed in its name and on its behalf by its President and attested by its
Secretary on May 30, 1990.
AFFILIATED FUND, INC.
BY: /S/RONALD P. LYNCH
Ronald P. Lynch
President
ATTEST:
/S/KENNETH B. CUTLER
Kenneth B. Cutler
Secretary
<PAGE>
THE UNDERSIGNED, President of Affiliated Fund, Inc., who
executed on behalf of said Corporation the foregoing Articles of Amendment, of
which this certificate is made a part, hereby acknowledges, in the name and on
behalf of said Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.
AFFILIATED FUND, INC.
BY: /S/RONALD P. LYNCH
Ronald P. Lynch
President
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
AFFILIATED FUND, INC.
AFFILIATED FUND, INC., a Maryland Corporation, having its
principal office c/o The Prentice-Hall Corporation System, Maryland, 11 East
Chase Street, Baltimore, Maryland 21202 (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of
Maryland, that:
FIRST: The Corporation filed its original Articles of
Incorporation with the State Department of Assessments and Taxation on
November 24, 1975.
SECOND: The Articles of Incorporation of the Corporation are
hereby amended to change the name of the Corporation by substituting
the name "Lord Abbett Affiliated Fund, Inc." for the name "Affiliated
Fund, Inc." in Article II in the Corporation's Articles of
Incorporation, dated November 24, 1975.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these presents
to be signed in its name and on its behalf by its Vice President and Secretary
attested by its Assistant Secretary on February ___, 1996.
AFFILIATED FUND, INC.
BY: /S/KENNETH B. CUTLER
Kenneth B. Cutler
Vice President
ATTEST:
/S/THOMAS F. KONOP
Thomas F. Konop
Assistant Secretary
<PAGE>
THE UNDERSIGNED, Vice President and Secretary of AFFILIATED
FUND, INC., who executed on behalf of said Corporation the foregoing Articles of
Amendment to Articles of Incorporation, of which this certificate is made a
part, hereby acknowledges, in the name and on behalf of said Corporation, the
foregoing Articles of Amendment to Articles of Incorporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the approval thereof, are
true in all material respects, under the penalties of perjury.
AFFILIATED FUND, INC.
BY: /S/KENNETH B. CUTLER
Kenneth B. Cutler
Vice President
<PAGE>
LORD ABBETT AFFILIATED FUND, INC.
ARTICLES OF AMENDMENT
LORD ABBETT AFFILIATED FUND, INC., a Maryland corporation
(hereinafter called the "Corporation"), hereby certifies to the State Department
of Assessments and Taxation of Maryland, that:
FIRST: The Articles of Incorporation of the Corporation (hereinafter called
the "Articles"), as heretofore amended, are hereby further amended by:
(a) Striking out Section 1 of ARTICLE V and inserting in lieu thereof:
"SECTION 1. The total number of shares which the
Corporation has authority to issue is 500,000,000 shares of
capital stock of the par value of $.001 each, having an
aggregate par value of $500,000. The Board of Directors of the
Corporation shall have full power and authority, from time to
time, to classify or reclassify any unissued shares of stock
of the Corporation, including, without limitation, the power
to classify or reclassify unissued shares into series, and to
classify or reclassify a series into one or more classes of
stock that may be invested together in the common investment
portfolio in which the series is invested, by setting or
changing the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption of such
shares of stock. All shares of stock of a series shall
represent the same interest in the Corporation and have the
same preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption as the other shares of
stock of that series, except to the extent that the Board of
Directors provides for differing preferences, conversion or
other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of
redemption of shares of stock of classes of such series as
determined pursuant to Articles Supplementary filed for record
with the State Department of Assessments and Taxation of
Maryland, or as otherwise determined pursuant to these
Articles or by the Board of Directors in accordance with law.
Prior to the first classification of unissued shares of stock
into additional series, all outstanding shares of stock shall
be of a single series, and prior to the first classification
of a series into additional classes, all outstanding shares of
stock of such series shall be of a single class.
Notwithstanding any other provision of these Articles, upon
the first classification of unissued shares of stock into
additional series, the Board of Directors shall specify a
legal name for the outstanding series, as well as for the new
series, in appropriate charter documents filed for record with
the State Department of Assessments and Taxation of Maryland
providing for such name change and classification, and upon
the first classification of a series into additional classes,
the Board of Directors shall specify a legal name for the
outstanding class, as well as for the new class or classes, in
appropriate charter documents filed for record with the State
Department of Assessments and Taxation of Maryland providing
for such name change and classification."
(b) Adding a new Section 2 to Article V (and renumbering
Sections 2, 3 and 4 as Sections 3, 4 and 5, respectively), as follows:
"SECTION 2. A description of the relative
preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption of all series and classes
of series of shares is as follows, unless otherwise set forth
in Articles Supplementary filed for record with the State
Department of Assessments and Taxation of Maryland or
otherwise determined pursuant to these Articles:
(a) ASSETS BELONGING TO SERIES. All consideration
received or receivable by the Corporation for the issue or
sale of shares of a particular series, together with all
assets in which such consideration is invested or
reinvested, all income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to
that series for all purposes, subject only to the rights of
creditors, and shall be so recorded upon the books of
account of the Corporation. Such consideration, assets,
income, earnings, profits and proceeds, including any
proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may
be, together with any unallocated items (as hereinafter
defined) relating to that series as provided in the
following sentence, are herein referred to as "assets
belonging to" that series. In the event that there are any
assets, income, earnings, profits or proceeds thereof, funds
or payments which are not readily identifiable as belonging
to any particular series (collectively "Unallocated Items"),
the Board of Directors shall allocate such Unallocated Items
to and among any one or more of the series created from time
to time in such manner and on such basis as it, in its sole
discretion, deems fair and equitable; and any Unallocated
Items so allocated to a particular series shall belong to
that series. Each such allocation by the Board of Directors
shall be conclusive and binding upon the stockholders of all
series for all purposes.
(b) LIABILITIES BELONGING TO SERIES. The assets
belonging to each particular series shall be charged with
the liabilities of the Corporation in respect of that
series, including any class thereof, and with all expenses,
costs, charges and reserves attributable to that series,
including any such class, and shall be so recorded upon the
books of account of the Corporation. Such liabilities,
expenses, costs, charges and reserves, together with any
unallocated items (as hereinafter defined) relating to that
series, including any class thereof, as provided in the
following sentence, so charged to that series, are herein
referred to as "liabilities belonging to" that series. In
the event there are any unallocated liabilities, expenses,
costs, charges or reserves of the Corporation which are not
readily identifiable as belonging to any particular series
(collectively "Unallocated Items"), the Board of Directors
shall allocate and charge such Unallocated Items to and
among any one or more of the series created from time to
time in such manner and on such basis as the Board of
Directors in its sole discretion deems fair and equitable;
and any Unallocated Items so allocated and charged to a
particular series shall belong to that series. Each such
allocation by the Board of Directors shall be conclusive and
binding upon the stockholders of all series for all
purposes. To the extent determined by the Board of
Directors, liabilities and expenses relating solely to a
particular class (including, without limitation,
distribution expenses under a Rule 12b-1 plan and
administrative expenses under an administration or service
agreement, plan or other arrangement, however designated,
which may be adopted for such class) shall be allocated to
and borne by such class and shall be appropriately reflected
(in the manner determined by the Board of Directors) in the
net asset value, dividends and distributions and liquidation
rights of the shares of such class.
(c) DIVIDENDS. Dividends and distributions on shares of
a particular series may be paid to the holders of shares of
that series at such times, in such manner and from such of
the income and capital gains, accrued or realized, from the
assets belonging to that series, after providing for actual
and accrued liabilities belonging to that series, as the
Board of Directors may determine. Such dividends and
distributions may vary between or among classes of a series
to reflect differing allocations of liabilities and expenses
of such series between or among such classes to such extent
as may be provided in or determined pursuant to Articles
Supplementary filed for record with the State Department of
Assessments and Taxation of Maryland or as may otherwise be
determined by the Board of Directors.
(d) LIQUIDATION. In the event of the liquidation or
dissolution of the Corporation, the stockholders of each
series shall be entitled to receive, as a series, when and
as declared by the Board of Directors, the excess of the
assets belonging to that series over the liabilities
belonging to that series. The assets so distributable to the
stockholders of one or more classes of a series shall be
distributed among such stockholders in proportion to the
respective aggregate net asset values of the shares of such
series held by them and recorded on the books of the
Corporation.
(e) VOTING. On each matter submitted to vote of the
stockholders, each holder of a share shall be entitled to
one vote for each such share standing in his name on the
books of the Corporation irrespective of the series or class
thereof and all shares of all series and classes shall vote
as a single class ("Single Class Voting"); provided,
however, that (I) as to any matter with respect to which a
separate vote of any series or class is required by the
Investment Company Act of 1940, as amended from time to
time, applicable rules and regulations thereunder, or the
Maryland General Corporation Law, such requirement as to a
separate vote of that series or class shall apply in lieu of
Single Class Voting as described above; (II) in the event
that the separate vote requirements referred to in (i) above
apply with respect to one or more (but less than all) series
or classes, then, subject to (iii) below, the shares of all
other series and classes shall vote as a single class; and
(III) as to any matter which does not affect the interest of
a particular series or class, only the holders of shares of
the one or more affected series or classes shall be entitled
to vote.
(f) CONVERSION. At such times (which times may vary
among shares of a class) as may be determined by the Board
of Directors, shares of a particular class of a series may
be automatically converted into shares of another class of
such series based on the relative net asset values of such
classes at the time of conversion, subject, however, to any
conditions of conversion that may be imposed by the Board of
Directors."
(c) Striking out the last sentence of Section 3(a) (as
renumbered from Section 2(a) by this Amendment) of Article V, and
inserting in lieu thereof:
"Each holder of the shares of capital stock of the
Corporation, upon request to the Corporation accompanied by
surrender (to the Corporation, or an agent designated by it)
of the appropriate stock certificate or certificates, if any,
in proper form for transfer, and such other instruments as the
Board of Directors may require, shall be entitled to require
the Corporation to redeem all or any part of the shares of
capital stock outstanding in the name of such holder on the
books of the Corporation, at a redemption price equal to the
net asset value of such shares determined as hereinafter set
forth. Notwithstanding the foregoing, the Corporation may
deduct from the proceeds otherwise due to any stockholder
requiring the Corporation to redeem shares a redemption charge
not to exceed one percent (1%) of such net asset value or a
reimbursement charge, a deferred sales charge or other charge
that is integral to the Corporation's distribution program
(which charges may vary within and among series and classes)
as may be established from time to time by the Board of
Directors."
(d) Striking out the words "of any class" from Section 5 (as
renumbered from Section 4 by this Amendment) of Article V.
(e) Striking out the last sentence of Section 1(b) of Article
VII.
(f) Striking out Section 1(g) of Article VII and inserting in
lieu thereof:
"(g) To authorize any agreement of the character
described in subsection (e) or (f) of this Section 1 or
other agreement or transaction with any person, corporation,
association, partnership or other organization, although one
or more of the members of the Board of Directors or officers
of the Corporation may be the other party to any such
agreement or transaction or an officer, director,
shareholder, or member of such other party, and no such
agreement or transaction shall be invalidated or rendered
voidable by reason of the existence of any such
relationship. Any director of the Corporation who is also an
officer, director, shareholder, or member of such other
party or who is so interested may be counted in determining
the existence of a quorum at any meeting of the Board of
Directors which shall authorize any such agreement or
transaction, and may vote thereat to authorize any such
agreement or transaction, with like force and effect as if
he were not such officer, director, shareholder, or member
of such other party or not so interested. Any agreement
entered into pursuant to said subsections (e) or (f) shall
be consistent with and subject to the requirements of the
Investment Company Act of 1940, as amended from time to
time, applicable rules and regulations thereunder, or any
other applicable Act of Congress hereafter enacted, and no
amendment to any agreement entered into pursuant to said
subsection (e) (other than an amendment reducing the
compensation of the other party thereto) shall be effective
unless assented to by the affirmative vote of a majority of
the outstanding voting securities of the Corporation (as
such phrase is defined in the Investment Company Act of
1940, as amended from time to time) entitled to vote on the
matter."
(g) Striking out the preamble to Section 3 of Article VII and
the portion of Section 3(a) of Article VII prior to subsection (1) and
inserting in lieu thereof:
"SECTION 3. For the purposes referred to in these Articles of
Incorporation, the net asset value of shares of the capital stock of the
Corporation of each series and class as of any particular time (a "determination
time") shall be determined by or pursuant to the direction of the Board of
Directors as follows:
(a) At times when a series is not classified into
multiple classes, the net asset value of each share of stock
of a series, as of a determination time, shall be the
quotient, carried out to not less than three decimal points,
obtained by dividing the net value of the assets of the
Corporation belonging to that series (determined as
hereinafter provided) as of such determination time by the
total number of shares of that series then outstanding,
including all shares of that series which the Corporation
has agreed to sell for which the price has been determined,
and excluding shares of that series which the Corporation
has agreed to purchase or which are subject to redemption
for which the price has been determined.
The net value of the assets of the Corporation of a
series as of a determination time shall be determined in
accordance with sound accounting practice by deducting from
the gross value of the assets of the Corporation belonging
to that series (determined as hereinafter provided), the
amount of all liabilities belonging to that series (as such
terms are defined in subsection (b) of Section 2 of Article
V), in each case as of such determination time.
The gross value of the assets of the Corporation
belonging to a series as of such determination time shall be
an amount equal to all cash, receivables, the market value
of all securities for which market quotations are readily
available and the fair value of other assets of the
Corporation belonging to that series (as such terms are
defined in subsection (a) of Section 2 of Article V) at such
determination time, all determined in accordance with sound
accounting practice and giving effect to the following:"
(h) Adding a new subsection (b) to Section 3 of Article VII
(and renumbering subsection (b) as subsection (c)), as follows:
"(b) At times when a series is classified into multiple
classes, the net asset value of each share of stock of a
class of such series shall be determined in accordance with
subsections (a) and (c) of this Section 3 with appropriate
adjustments to reflect differing allocations of liabilities
and expenses of such series between or among such classes to
such extent as may be provided in or determined pursuant to
Articles Supplementary filed for record with the State
Department of Assessments and Taxation of Maryland or as may
otherwise be determined by the Board of Directors."
(j) Striking out Section 4 of Article VII and inserting in
lieu thereof:
"SECTION 4. Any determination as to any of
the following matters made by or pursuant to the direction of
the Board of Directors consistent with these Articles of
Incorporation and in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of duties, shall
be final and conclusive and shall be binding upon the
Corporation and every holder of shares of capital stock of the
Corporation, of any series or class, namely, the amount of the
assets, obligations, liabilities and expenses of the
Corporation or belonging to any series or with respect to any
class; the amount of the net income of the Corporation from
dividends and interest for any period and the amount of assets
at any time legally available for the payment of dividends
with respect to any series or class; the amount of paid-in
surplus, other surplus, annual or other net profits, or net
assets in excess of capital, undivided profits, or excess of
profits over losses on sales of securities belonging to the
Corporation or any series or class; the amount, purpose, time
of creation, increase or decrease, alteration or cancellation
of any reserves or charges and the propriety thereof (whether
or not any obligation or liability for which such reserves or
charges shall have been created shall have been paid or
discharged) with respect to the Corporation or any series or
class; the market value, or any sale, bid or asked price to be
applied in determining the market value, of any security owned
or held by the Corporation; the fair value of any other asset
owned by the Corporation; the number of shares of stock of any
series or class issued or issuable; the existence of
conditions permitting the postponement of payment of the
repurchase price of shares of stock of any series or class or
the suspension of the right of redemption as provided by law;
any matter relating to the acquisition, holding and
disposition of securities and other assets by the Corporation;
any question as to whether any transaction constitutes a
purchase of securities on margin, a short sale of securities,
or an underwriting of the sale of, or participation in any
underwriting or selling group in connection with the public
distribution of any securities; and any matter relating to the
issue, sale, repurchase and/or other acquisition or
disposition of shares of stock of any series or class."
SECOND: The Board of Directors of the Corporation on March 14,
1996, duly adopted resolutions in which was set forth the foregoing amendments
to the Articles, declaring that the said amendments of the Articles as proposed
were advisable and directing that they be submitted for action thereon by the
stockholders of the Corporation at a meeting to be held on June 19, 1996.
THIRD: Notice setting forth said amendments of the Articles
and stating that a purpose of the meeting of the stockholders would be to take
action thereon, was given, as required by law, to all stockholders entitled to
vote thereon. The amendments of the Articles as hereinabove set forth were
approved by the stockholders of the Corporation at said meeting by the
affirmative vote of a majority of all the votes entitled to be cast thereon, as
required by the Articles.
FOURTH: The amendments of the Articles hereinabove set forth have been duly
advised by the Board of Directors and approved by the stockholders of the
Corporation.
FIFTH: This Amendment does not increase the number of shares
which the Corporation has authority to issue. Immediately before this Amendment,
the total number of shares of stock which the Corporation had authority to issue
was 500,000,000 shares of capital stock of the par value of $1.25 each, having
an aggregate par value of $625,000,000. As amended by this Amendment, the total
number of shares of stock which the Corporation has authority to issue is
500,000,000 shares of capital stock of the par value of $.001 each, having an
aggregate par value of $500,000.
<PAGE>
IN WITNESS WHEREOF, Lord Abbett Affiliated Fund, Inc. has caused these
presents to be signed in its name and on its behalf by its President and
witnessed by its Secretary on July 1, 1996.
LORD ABBETT AFFILIATED FUND, INC.
By:/S/ROBERT S. DOW
Robert S. Dow, President
WITNESS:
/S/KENNETH B. CUTLER
Kenneth B. Cutler, Secretary
<PAGE>
THE UNDERSIGNED, President of Lord Abbett Affiliated Fund,
Inc., who executed on behalf of the Corporation the foregoing Articles of
Amendment, of which this Certificate is made a part, hereby acknowledges, in the
name and on behalf of said Corporation, the foregoing Articles of Amendment to
be the corporate act of said Corporation and further certifies that, to the best
of his knowledge, information and belief, the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/S/ROBERT S. DOW
Robert S. Dow, President
<PAGE>
LORD ABBETT AFFILIATED FUND, INC.
ARTICLES OF AMENDMENT
LORD ABBETT AFFILIATED FUND, INC., a Maryland corporation
(hereinafter called the "Corporation"), hereby certifies to the State Department
of Assessments and Taxation of Maryland, that:
FIRST: The Articles of Incorporation of the Corporation
(hereinafter called the "Articles"), as heretofore amended, are hereby further
amended by specifying the legal name for the existing class of capital stock of
the Corporation, both outstanding shares and unissued shares, as Class A.
SECOND: A majority of the entire Board of Directors of the Corporation on
March 14, 1996, duly adopted resolutions approving the foregoing amendment to
the Articles.
THIRD: The amendment of the Articles hereinabove set forth has
been duly approved by the Board of Directors of the Corporation and is limited
to a change expressly permitted by ss. 2-605 of the General Corporation Law of
the State of Maryland to be made without action of the stockholders.
FOURTH: The Corporation is registered as an open-end company under the
Investment Company Act of 1940, as amended from time to time.
<PAGE>
IN WITNESS WHEREOF, Lord Abbett Affiliated Fund, Inc. has caused these
presents to be signed in its name and on its behalf by its President and
witnessed by its Secretary on July 1, 1996.
LORD ABBETT AFFILIATED FUND, INC.
By: /S/ROBERT S. DOW
Robert S. Dow, President
WITNESS:
/S/KENNETH B. CUTLER
Kenneth B. Cutler, Secretary
<PAGE>
THE UNDERSIGNED, President of Lord Abbett Affiliated Fund,
Inc., who executed on behalf of the Corporation the foregoing Articles of
Amendment, of which this Certificate is made a part, hereby acknowledges, in the
name and on behalf of said Corporation, the foregoing Articles of Amendment to
be the corporate act of said Corporation and further certifies that, to the best
of his knowledge, information and belief, the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/S/ROBERT S. DOW
Robert S. Dow, President
<PAGE>
LORD ABBETT AFFILIATED FUND, INC.
ARTICLES SUPPLEMENTARY
Lord Abbett Affiliated Fund, Inc., a Maryland corporation
(hereinafter called the "Corporation"), hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
FIRST: The Corporation presently has authority to issue
500,000,000 shares of capital stock, of the par value $.001 each, having an
aggregate par value of $500,000 and previously classified and designated by the
Board of Directors as Class A shares. The number of shares of capital stock
which the Corporation shall have authority to issue is hereby increased to
1,000,000,000, of the par value $.001 each, having an aggregate par value of
$1,000,000.
SECOND: Pursuant to the authority of the Board of Directors to
classify and reclassify unissued shares of stock of the Corporation and to
classify a series into one or more classes of such series, the Board of
Directors hereby (i) classifies and reclassifies 100,000,000 authorized but
unissued Class A shares as Class C shares and (ii) classifies and reclassifies
100,000,000 authorized but unissued Class A shares as Class B shares.
THIRD: Subject to the power of the Board of Directors to
classify and reclassify unissued shares, all shares of the Corporation's Class B
and Class C stock shall be invested in the same investment portfolio of the
Corporation as the Class A stock and shall have the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption set forth in Article V of
the Articles of Incorporation of the Corporation (hereafter called the
"Articles") and shall be subject to all other provisions of the Articles
relating to stock of the Corporation generally.
FOURTH: The Corporation is registered as an open-end company
under the Investment Company Act of 1940, as amended. The total number of shares
of capital stock that the Corporation has authority to issue has been increased
by the Board of Directors in accordance with ss. 2-105(c) of Title 2 of the
General Corporation Law of the State of Maryland.
FIFTH: The Class B and Class C shares aforesaid have been duly
classified by the Board of Directors under the authority contained in the
Articles.
IN WITNESS WHEREOF, Lord Abbett Affiliated Fund, Inc. has caused these
presents to be signed in its name and on its behalf by its President and
witnessed by its Secretary on July 9, 1996.
LORD ABBETT AFFILIATED FUND, INC.
By:/S/ROBERT S. DOW
Robert S. Dow, President
WITNESS:
/S/KENNETH B. CUTLER
Kenneth B. Cutler, Secretary
<PAGE>
THE UNDERSIGNED, President of Lord Abbett Affiliated Fund,
Inc., who executed on behalf of the Corporation the foregoing Articles
Supplementary, of which this Certificate is made a part, hereby acknowledges, in
the name and on behalf of said Corporation, the foregoing Articles Supplementary
to be the corporate act of said Corporation and further certifies that, to the
best of his knowledge, information and belief, the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/S/ROBERT S. DOW
Robert S. Dow, President
<PAGE>
LORD ABBETT AFFILIATED FUND, INC.
CERTIFICATE OF CORRECTION
Lord Abbett Affiliated Fund, Inc., a Maryland corporation
having its principal office in Maryland in the City of Baltimore, Maryland
(hereinafter the "Corporation"), certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The title of the document being corrected is:
Lord Abbett Affiliated Fund, Inc.
Articles Supplementary
SECOND: The only party to the document being corrected is Lord Abbett
Affiliated Fund, Inc.
THIRD: The document being corrected was filed with the State
Department of Assessments and Taxation of Maryland on July 9, 1996.
FOURTH: Before the document being corrected was filed, the
existing class of capital stock of the Corporation, both outstanding shares and
unissued shares, was called Class A. Among other things, the document being
corrected increased the number of shares of capital stock which the Corporation
shall have the authority to issue from 500,000,000 shares to 1,000,000,000
shares, all of which the Board of Directors intended initially to be Class A.
This Certificate of Correction is being filed solely to state that all such
shares were initially Class A, as follows:
(1) the provision in the document as previously filed read as follows:
FIRST: The Corporation presently has authority to
issue 500,000,000 shares of capital stock, of the par value
$.001 each, having an aggregate par value of $500,000 and
previously classified and designated by the Board of Directors
as Class A shares. The number of shares of capital stock which
the Corporation shall have authority to issue is hereby
increased to 1,000,000,000, of the par value $.001 each,
having an aggregate par value of $1,000,000.
(2) The provision in the document as corrected reads as follows:
FIRST: The Corporation presently has authority to issue
500,000,000 shares of capital stock, of the par value $.001 each,
having an aggregate par value of $500,000 and previously
classified and designated by the Board of Directors as Class A
shares. The number of Class A shares of capital stock which the
Corporation shall have authority to issue is hereby increased to
1,000,000,000, of the par value $.001 each, having an aggregate
par value of $1,000,000.
IN WITNESS WHEREOF, Lord Abbett Affiliated Fund, Inc. has
caused this Certificate of Correction to be signed in its name and on its behalf
by one of its Vice Presidents and witnessed by one of its Assistant Secretaries
on August 30, 1996.
LORD ABBETT AFFILIATED FUND, INC.
By:/S/KENNETH B. CUTLER
Vice President
WITNESS:
/S/
Assistant Secretary
<PAGE>
THE UNDERSIGNED Vice President of Lord Abbett Affiliated Fund,
Inc., who executed on behalf of the Corporation the foregoing Certificate of
Correction, of which this Certificate is made a part, hereby acknowledges, in
the name and on behalf of said Corporation, the foregoing Certificate of
Correction to be the corporate act of said Corporation and further certifies
that, to the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the authorization and approval thereof
are true in all material respects under the penalties of perjury.
/S/KENNETH B. CUTLER
Vice President
<PAGE>
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
LORD ABBETT AFFILIATED FUND, INC.
LORD ABBETT AFFILIATED FUND, INC., a Maryland corporation
having its principal office c/o The Prentice-Hall Corporation System, 11 Chase
Street, Baltimore, Maryland 21202 (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland, that:
FIRST: The Corporation presently has authority to issue
1,000,000,000 shares of capital stock, of the par value $.001 each,
having an aggregate par value of $1,000,000 and previously classified
and designated by the Board of Directors as follows: Class A
(650,000,000 shares); Class B (100,000,000 shares); Class C
(100,000,000 shares); Class Y (75,000,000 shares); and Class P
(75,000,000 shares). The number of shares of capital stock which the
Corporation shall have authority to issue is hereby increased to
1,500,000,000, of the par value of $.001, having an aggregate par value
of $1,500,000,
SECOND: Pursuant to the authority of the Board of Directors to
classify and reclassify unissued shares of stock of the Corporation and
to classify a series into one or more classes of such series, the Board
of Directors hereby classifies and reclassifies the 500,000,000 newly
authorized but unissued shares as Class A shares.
THIRD: Subject to the power of the Board of Directors to
classify and reclassify unissued shares, all shares of the
Corporation's Class A stock shall be invested in the same investment
portfolio of the Corporation as the Class B, Class C, Class Y and Class
P stock and shall have the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption set forth in
Article V of the Articles of Incorporation of the Corporation
(hereafter called the "Articles") and shall be subject to all other
provisions of the Articles relating to stock of the Corporation
generally.
FOURTH. The Corporation is registered as an open-end company under the
Investment Company Act of 1940, as amended.
FIFTH: The total number of shares of capital stock that the
Corporation has authority to issue has been increased by the Board of
Directors in accordance with Section 2-105(c) of Title 2 of the General
Corporation Law of the State of Maryland.
SIXTH: The Class A shares aforesaid have been duty classified by the
Board of Directors under the authority contained in the Articles.
SEVENTH: Upon the effectiveness of these Articles
Supplementary, the Corporation shall have authority to issue
1,500,000,000 shares of capital stock, of the par value of $.001 each,
having an aggregate par value of $1,500,000, previously or herein
classified and designated by the Board of Directors as follows: Class A
(1,150,000,000 shares); Class B (100,000,000 shares); Class C
(100,000,000 shares); Class Y (75,000,000 shares) and Class P
(75,000,000 shares),
IN WITNESS WHEREOF, Lord Abbett Affiliated Fund, Inc. has
caused these presents to be signed in its name and on its behalf by its Vice
President and witnessed by its Assistant Secretary on January 27, 1998.
LORD ABBETT AFFILIATED FUND, INC.
BY: /S/THOMAS F. KONOP
Thomas F. Konop
Vice President
WITNESS:
/S/LAWRENCE H. KAPLAN
Lawrence H. Kaplan
Vice President and Assistant Secretary
<PAGE>
THE UNDERSIGNED, Vice President of LORD ABBETT AFFILIATED
FUND, INC., who executed on behalf of said Corporation the foregoing Articles
Supplementary, of which this certificate is made a part, hereby acknowledges, in
the name and on behalf of said Corporation, the foregoing Articles Supplementary
to be the corporate act of said Corporation and further certifies that, to the
best of his knowledge, information and belief, the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
BY: /S/THOMAS F. KONOP
Thomas F. Konop
Vice President
<PAGE>
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
LORD ABBETT AFFILIATED FUND, INC.
LORD ABBETT AFFILIATED FUND, INC., a Maryland corporation
having its principal office c/o The Prentice-Hall Corporation System, 11 Chase
Street, Baltimore, Maryland 21202 (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland, that:
FIRST: The Corporation presently has authority to issue
1,000,000,000 shares of capital stock, of the par value $.001 each,
having an aggregate par value of $1,000,000. The Board of Directors has
previously classified and designated 725,000,000 authorized shares as
Class A shares, 100,000,000 authorized shares as Class B shares,
100,000,000 authorized shares as Class C shares, and 75,000,000 as
Class Y shares.
SECOND: Pursuant to the authority of the Board of Directors to
classify and reclassify unissued shares of stock of the Corporation and
to classify a series into one or more classes of such series, the Board
of Directors hereby classifies and reclassifies 75,000,000 authorized
but unissued Class A shares as Class P shares, thus leaving 650,000,000
authorized shares as Class A shares.
THIRD: Subject to the power of the Board of Directors to
classify and reclassify unissued shares, all shares of the
Corporation's Class P stock shall be invested in the same investment
portfolio of the Corporation as the Class A, Class B, Class C and Class
Y stock and shall have the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption set forth in
Article V of the Articles of Incorporation of the Corporation
(hereafter called the "Articles") and shall be subject to all other
provisions of the Articles relating to stock of the Corporation
generally.
FOURTH: The Class P shares aforesaid have been duly classified by the
Board of Directors under the authority contained in the Articles.
IN WITNESS WHEREOF, Lord Abbett Affiliated Fund, Inc. has
caused these presents to be signed in its name and on its behalf by its Vice
President and witnessed by its Assistant Secretary on December 22nd, 1997.
LORD ABBETT AFFILIATED FUND, INC.
BY: /S/THOMAS F. KONOP
Thomas F. Konop
Vice President
WITNESS:
/S/LAWRENCE H. KAPLAN
Lawrence H. Kaplan
Vice President and Assistant Secretary
<PAGE>
THE UNDERSIGNED, Vice President of LORD ABBETT AFFILIATED
FUND, INC., who executed on behalf of said Corporation the foregoing Articles
Supplementary, of which this certificate is made a part, hereby acknowledges, in
the name and on behalf of said Corporation, the foregoing Articles Supplementary
to be the corporate act of said Corporation and further certifies that, to the
best of his knowledge, information and belief, the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
BY: /S/THOMAS F. KONOP
Thomas F. Konop
Vice President
<PAGE>
LORD ABBETT AFFILIATED FUND, INC.
CERTIFICATE OF CORRECTION
Lord Abbett Affiliated Fund, Inc., a Maryland corporation
having its principal office in Maryland in the City of Baltimore, Maryland
(hereinafter the "Corporation"), certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The title of the document being corrected is:
Lord Abbett Affiliated Fund, Inc.
Articles Supplementary
SECOND: The only party to the document being corrected is Lord Abbett
Affiliated Fund, Inc.
THIRD: The document being corrected was filed with the State
Department of Assessments and Taxation of Maryland on October 9, 1997.
FOURTH: Before the document being corrected was filed, the
Board of Directors had previously classified and designated 800,000,000
authorized shares of the Corporation as Class A shares, 100,000,000 as Class B
shares, and 100,000,000 as Class C shares. Among other things, the document
being corrected classified 300,000,000 authorized and unissued Class A shares of
the Corporation as Class Y shares. This Certificate of Correction is being filed
solely to correct the amount of shares classified as Class Y, as follows:
(1) The relevant provisions in the document as previously
filed read as follows:
SECOND: Pursuant to the authority of the Board of
Directors to classify and reclassify unissued shares of stock
of the Corporation and to classify a series into one or more
classes of such series, the Board of Directors hereby
classifies and reclassifies 300,000,000 authorized but
unissued Class A shares as Class Y shares.
(2) The provision in the document as corrected reads as
follows,.
SECOND: Pursuant to the authority of the Board of
Directors to classify and reclassify unissued shares of stock
of the Corporation and to classify a series into one or more
classes of such series, the Board of Directors hereby
classifies and reclassifies 75,000,000 authorized but unissued
Class A shares as Class Y shares, thus leaving 725,000,000
authorized Class A shares.
IN WITNESS WHEREOF, Lord Abbett Affiliated Fund, Inc. has
caused this Certificate of Correction to be signed in its name and on its behalf
by one of its Vice Presidents and witnessed by one of its Assistant Secretaries
on December 17, 1997.
LORD ABBETT AFFILIATED FUND, INC.
BY: /S/THOMAS F. KONOP
Thomas F. Konop
Vice President and
Assistant Secretary
WITNESS:
/S/LAWRENCE H. KAPLAN
Lawrence H. Kaplan
Vice President and Assistant Secretary
<PAGE>
THE UNDERSIGNED Vice President of Lord Abbett Affiliated Fund,
Inc., who executed on behalf of the Corporation the foregoing Certificate of
Correction, of which this Certificate is made a part, hereby acknowledges, in
the name and on behalf of said Corporation, the foregoing Certificate of
Correction to be the corporate act of said Corporation and further certifies
that, to the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the authorization and approval thereof
are true in all material respects under the penalties of perjury.
BY: /S/THOMAS F. KONOP
Thomas F. Konop
Vice President
<PAGE>
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
LORD ABBETT AFFILIATED FUND, INC.
LORD ABBETT AFFILIATED FUND, INC., a Maryland corporation
having its principal office c/o The Prentice-Hall Corporation System Maryland,
11 Chase Street, Baltimore, Maryland 21202 (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:
FIRST: The Corporation presently has authority to issue
1,000,000,000 shares of capital stock, of the par value $.001 each,
having an aggregate par value of $1,000,000. The Board of Directors has
previously classified and designated 800,000,000 authorized shares as
Class A shares, 100,000,000 authorized shares as Class B shares, and
100,000,000 authorized shares as Class C shares.
SECOND: Pursuant to the authority of the Board of Directors to
classify and reclassify unissued shares of stock of the Corporation and
to classify a series into one or more classes of such series, the Board
of Directors hereby classifies and reclassifies 300,000,000 authorized
but unissued Class A shares as Class Y shares.
THIRD: Subject to the power of the Board of Directors to
classify and reclassify unissued shares, all shares of the
Corporation's Class Y stock shall be invested in the same investment
portfolio of the Corporation as the Class A, Class B and Class C stock
and shall have the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption set forth in Article V of the
Articles of Incorporation of the Corporation (hereafter called the
"Articles") and shall be subject to all other provisions of the
Articles relating to stock of the Corporation generally.
FOURTH: The Class Y shares aforesaid have been duly classified by the
Board of Directors under the authority contained in the Articles.
IN WITNESS WHEREOF, Lord Abbett Affiliated Fund, Inc. has
caused these presents to be signed in its name and on its behalf by its Vice
President and witnessed by its Assistant Secretary on October 1, 1997.
LORD ABBETT AFFILIATED FUND, INC.
BY: /S/THOMAS F. KONOP
Thomas F. Konop
Vice President
WITNESS:
/S/LAWRENCE H. KAPLAN
Lawrence H. Kaplan
Vice President and Assistant Secretary
<PAGE>
THE UNDERSIGNED, Vice President of LORD ABBETT AFFILIATED
FUND, INC., who executed on behalf of said Corporation the foregoing Articles
Supplementary, of which this certificate is made a part, hereby acknowledges, in
the name and on behalf of said Corporation, the foregoing Articles Supplementary
to be the corporate act of said Corporation and further certifies that, to the
best of his knowledge, information and belief, the matters and facts set forth
therein with respect to the authorization and thereof are true in all material
respects under the penalties of perjury.
BY: /S/THOMAS F. KONOP
Thomas F. Konop
Vice President
BY-LAWS
OF
LORD ABBETT AFFILIATED FUND, INC.
(a Maryland Corporation)
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the Corporation
in Maryland shall be in the City of Baltimore, and the name of the resident
agent in charge thereof is the Prentice-Hall Corporation Systems, Maryland.
Section 2. OTHER OFFICES. The Corporation may also have an office in
the City and State of New York and offices at such other places as the
Board of Directors may from time to time determine.
ARTICLE II
SECTION 1. ANNUAL MEETINGS. The Corporation shall not hold an annual
meeting of its stockholders in any fiscal year of the Corporation unless
required in accordance with the following sentence. The Chairman of the Board or
the President shall call an annual meeting of the stockholders when one or more
matters are required to be acted on by stockholders under the Investment Company
Act of 1940, as amended, and the Chairman of the Board, the President, a Vice
President, the Secretary or any director shall call an annual meeting of
stockholders at the request in writing of a majority of the Board of Directors
or of stockholders holding at least one-quarter of the stock of the Corporation
outstanding and entitled to vote at the meeting. Any annual meeting of the
stockholders held pursuant to the foregoing sentence shall be held at such time
and at such place, within the City of New York or elsewhere, as may be fixed by
the Chairman of the Board or the President or the Board of Directors or by the
stockholders holding at least one-quarter of the stock of the Corporation
outstanding and entitled to vote, as the case may be, and as may be stated in
the notice setting forth such call, provided that any stockholders requesting
such meeting shall have paid to the Corporation the reasonably estimated cost of
preparing and mailing the notice thereof, which the Secretary shall determine
and specify to such stockholders. Any meeting of stockholders held in accordance
with this Section 1 shall for all purposes constitute the annual meeting of
stockholders for the fiscal year of the Corporation in which the meeting is held
and, without limiting the generality of the foregoing, shall be held for the
purposes of (a) acting on any such matter or matters so required to be acted on
by stockholders under the Investment Company Act of 1940, as amended, and (b)
electing directors to hold the offices of any directors who have held office for
more than one year (or, in the case of directors elected prior to July 1, 1987,
who have held office for more than three years) or who have been elected by the
Board of Directors to fill vacancies which result from any cause and for
transacting such other business as may properly be brought before the meeting.
Only such business, in addition to that prescribed by law, by the Articles of
Incorporation and by these By-laws, may be brought before such meeting as may be
specified by resolution of the Board of Directors or by writing filed with the
Secretary of the Corporation and signed by the Chairman of the Board or by the
President or by a majority of the directors or by stockholders holding at least
one-quarter of the stock of the Corporation outstanding and entitled to vote at
the meeting.
Section 2. SPECIAL MEETINGS. Special meetings of the stockholders for
any purpose or purposes may be held upon call of the Chairman of the Board or
the President or by a majority of the Board of Directors, and shall be called by
the Chairman of the Board, the President, a Vice President, the Secretary or any
director at the request in writing of a majority of the Board of Directors or of
stockholders holding at least one-quarter of the stock of the Corporation
outstanding and entitled to vote at the meeting, at such time and at such place
where an annual meeting of stockholders could be held, as may be fixed by the
Chairman of the Board or the President or the Board of Directors or by the
stockholders holding at least one-quarter of the stock of the Corporation
outstanding and so entitled to vote, as the case may be, and as may be stated in
the notice setting forth such call, provided that any stockholders requesting
such meeting shall have paid to the Corporation the reasonably estimated cost of
preparing and mailing the notice thereof, which the Secretary shall determine
and specify to such stockholders. Such request shall state the purpose or
purposes of the proposed meeting, and only such purpose or purposes so specified
may properly be brought before such meeting. No special meeting need be called
upon the request of the holders of less than a majority of the stock of the
Corporation outstanding and so entitled to vote to consider any matter which is
substantially the same as a matter voted upon at any special meeting of the
stockholders held during the preceding 12 months.
Section 3. NOTICE OF MEETINGS. Written or printed notice of every
annual or special meeting of stockholders, stating the time and place thereof
and the general nature of the business proposed to be transacted at any such
meeting, shall be delivered personally or mailed not less than 10 or more than
90 days previous thereto to each stockholder of record entitled to vote at the
meeting or entitled to notice of the meeting at his address as the same appears
on the books of the Corporation. Meetings may be held without notice if all of
the stockholders entitled to vote are present or represented at the meeting-or
if notice is waived in writing, either before or after the meeting, by those not
present or represented at the meeting. No notice of an adjourned meeting of the
stockholders other than an announcement of the time and place thereof at the
preceding meeting shall be required.
Section 4. QUORUM. At every meeting of the stockholders the holders of
record of a majority of the outstanding shares of the stock of the Corporation
entitled to vote at the meeting, whether present in person or represented by
proxy, shall, except as otherwise provided by law, constitute a quorum. If at
any meeting there shall be no quorum, the holders of record of a majority of
such shares entitled to vote at the meeting so present or represented may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall have been obtained, at which time any business
may be transacted which might have been transacted at the meeting as originally
called.
Section 5. VOTING. Each stockholder entitled to vote at any meeting
shall have one vote in person or by proxy for each share of stock held by him,
but no proxy shall be voted after eleven months from its date, unless such proxy
provides for a longer period. All elections of directors shall be held, and all
questions except as otherwise provided by law or by the Articles of
Incorporation or by these By-laws, shall be decided, by a majority of the votes
cast by stockholders present or represented and entitled to vote thereat in
person or by proxy.
ARTICLE III
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, provided, however, that
the Board of Directors may authorize the Corporation to enter into an agreement
or agreements with any person, corporation, association, partnership or other
organization, subject to the Board's supervision and control for the purpose of
providing managerial, investment advisory and related services to the
Corporation which may include management or supervision of the investment
portfolio of the Corporation.
Section 2. NUMBER, CLASS, QUORUM, ELECTION, TERM OF OFFICE AND
QUALIFICATIONS. The Board of Directors of the Corporation shall consist of not
less than three or more than fifteen persons, none of whom need be stockholders
of the Corporation. The number of directors (within the above limits) shall be
determined by the Board of Directors from time to time, as it sees fit, by vote
of a majority of the whole Board. Directors elected prior to July 1, 1987, shall
be divided into three classes, each to hold office for a term of three years;
directors elected thereafter shall consist of one class only. The directors
shall be elected at each annual meeting of stockholders and, whether or not
elected for a specific term, shall hold office, unless sooner removed, until
their respective successors are elected and qualify. One-third of the whole
Board, but in no event less than two, shall constitute a quorum for the
transaction of business, but if at any meeting of the Board there shall be less
than a quorum present, a majority of the directors present may adjourn the
meeting from time to time until a quorum shall have been obtained, when any
business may be transacted which might have been transacted at the meeting as
originally convened. No notice of an adjourned meeting of the directors other
than an announcement of the time and place thereof at the preceding meeting
shall be required. The acts of the majority of the directors present at any
meeting at which there is a quorum shall be the acts of the Board, except as
otherwise provided by law, by the Articles of Incorporation or by these By-laws.
Section 3. VACANCIES. The Board of Directors, by vote of a majority of
the whole Board, may elect directors to fill vacancies in the Board resulting
from an increase in the number of directors or from any other cause. Directors
so chosen shall hold office until their respective successors are elected and
qualify, unless sooner displaced pursuant to law or these By-laws. The
stockholders, at any meeting called for the purpose, may, with or without cause,
remove any director by the affirmative vote of the holders of a majority of the
votes entitled to be cast, and at any meeting called for the purpose may fill
the vacancy in the Board thus caused.
Section 4. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such time and place, within or without the State of Maryland,
as may from time to time be fixed by Resolution of the Board or as may be
specified in the notice of any meeting. No notice of regular meetings of the
Board shall be required.
Section 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called from time to time by the Chairman of the Board, the President, any
Vice President or any two directors. Each special meeting of the Board shall be
held at such place, either within or outside the State of Maryland, as shall be
designated in the notice of such meeting. Notice of each such meeting shall be
mailed to each director, at his residence or usual place of business, at least
two days before the day of the meeting, or shall be directed to him at such
place by telegraph or cable, or be delivered to him personally not later than
the day before the day of the meeting. Every such notice shall state the time
and place of the meeting but need not state the purposes thereof, except as
otherwise expressly provided in these By-laws or by statute.
Section 6. TELEPHONE CONFERENCE MEETINGS. Any meeting of the Board or
any committee thereof may be held by conference telephone, regardless where each
director may be located at the time, by means of which all persons participating
in the meeting can hear each other, and participation in such meeting in such
manner shall constitute presence in person at such meeting.
Section 7. FEES AND EXPENSES. The directors shall receive such fees and
expenses for services to the Corporation as may be fixed by the Board of
Directors, subject however, to such limitations as may be provided in the
Articles of Incorporation. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity as an
officer, agent or otherwise and receiving compensation therefor.
Section 8. TRANSACTIONS WITH DIRECTORS. Except as otherwise provided by
law or in the Articles of Incorporation, a director of the Corporation shall not
in the absence of fraud be disqualified from office by dealing or contracting
with the Corporation either as a vendor, purchaser or otherwise, nor in the
absence of fraud shall any transaction or contract of the Corporation be void or
voidable or affected by reason of the fact that any director, or any firm of
which any director is a member, or any corporation of which any director is an
officer, director or stockholder, is in any way interested in such transaction
or contract, provided that at the meeting of the Board of Directors, at which
said contract or transaction is authorized or confirmed, the existence of an
interest of such director, firm or corporation is disclosed or made known and
there shall be present a quorum of the Board of Directors a majority of which,
consisting of directors not so interested, shall approve such contract or
transaction. Nor shall any director be liable to account to the Corporation for
any profit realized by him from or through any such transaction or contract of
the Corporation ratified or approved as aforesaid, by reason of the fact that he
or any firm of which he is a member, or any corporation of which he is an
officer, director, or stockholder, was interested in such transaction or
contract. Directors so interested may be counted when present at meetings of the
Board of Directors for the purpose of determining the existence of a quorum. Any
contract, transaction or act of the Corporation or of the Board of Directors
(whether or not approved or ratified as hereinabove provided) which shall be
ratified by a majority of the votes cast at any annual or special meeting at
which a quorum is present called for such purpose, or approved in writing by a
majority in interest of the stockholders having voting power without a meeting,
shall except as otherwise provided by law, be valid and as binding as though
ratified by every stockholder of the Corporation.
Section 9. COMMITTEES. The Board of Directors may, by resolution
adopted by a majority of the whole Board, designate one or more committees each
such committee to consist of two or more directors of the Corporation, which, to
the extent permitted by law and provided in said resolution, shall have and may
exercise the powers of the Board over the business and affairs of the
Corporation, and may have power to authorize the seal of the Corporation to be
affixed to all papers which may require it. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the Board of Directors. A majority of the members of any such
committee may determine its action and fix the time and place of its meetings,
unless the Board of Directors shall otherwise provide. The Board of Directors
shall have power at any time to change the membership of, to fill vacancies in,
or to dissolve any such committee.
Section 10. WRITTEN CONSENTS. Any action required or permitted to be
taken at any meeting of the Board of Directors or by any committee thereof may
be taken without a meeting, if a written consent thereto is signed by all
members of the Board or of such committee, as the case may be, and such written
consent is filed with the minutes or proceedings of the Board or committee.
Section 11. WAIVER OF NOTICE. Whenever under the provisions of these
By-laws, or of the Articles of Incorporation, or of any of the laws of the State
of Maryland, or other applicable statute, the Board of Directors is authorized
to hold any meeting or take any action after notice or after the lapse of any
prescribed period of time, a waiver thereof, in writing, signed by the person or
persons entitled to such notice or lapse of time, whether before or after the
time of meeting or action stated herein, shall be deemed equivalent thereto. The
presence at any meeting of a person or persons entitled to notice thereof shall
be deemed a waiver of such notice as to such person or persons.
ARTICLE IV
OFFICERS
Section 1. NUMBER AND DESIGNATION. The Board of Directors shall each
year appoint from among their members a Chairman and a President of the
Corporation, and shall appoint one or more Vice Presidents, a Secretary and a
Treasurer and, from time to time, any other officers and agents as it may deem
proper. Any two of the above-mentioned offices, except those of the President
and a Vice President, may be held by the same person, but no officer shall
execute, acknowledge or verify any instrument in more than one capacity if such
instrument be required by law or by these By-laws to be executed, acknowledged
or verified by any two or more officers.
Section 2. TERM OF OFFICE. The term of office of all officers shall be
one year or until their respective successors are chosen; but any officer or
agent chosen or appointed by the Board of Directors may be removed, with or
without cause, at any time, by the affirmative vote of a majority of the members
of the Board then in office.
Section 3. DUTIES. Subject to such limitations as the Board of
Directors may from time to time prescribe, the officers of the Corporation shall
each have such powers and duties as generally appertain to their respective
offices as well as such powers and duties as from time to time may be conferred
by the Board of Directors.
ARTICLE V
CERTIFICATE OF STOCK
Section 1. FORM AND ISSUANCE. Each stockholder of the Corporation shall
be entitled upon request, to a certificate or certificates, in such form as the
Board of Directors may from time to time prescribe, which shall represent and
certify the number of shares of stock of the Corporation owned by such
stockholder. The certificates for shares of stock of the Corporation shall bear
the signature, either manual or facsimile, of the Chairman of the Board or the
President or a Vice President and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, and shall be sealed with the seal of the
Corporation or bear a facsimile of such seal. The validity of any stock
certificate shall not be affected if any officer whose signature appears thereon
ceases to be an officer of the Corporation before such certificate is issued.
Section 2. TRANSFER OF STOCK. The shares of stock of the Corporation
shall be transferable on the books of the Corporation by the holder thereof in
person or by a duly authorized attorney, upon surrender for cancellation of a
certificate or certificates for a like number of shares, with a duly executed
assignment and power of transfer endorsed thereon or attached thereto, or, if no
certificate has been issued to the holder in respect of shares of stock of the
Corporation, upon receipt of written instructions, signed by such holder, to
transfer such shares from the account maintained in the name of such holder by
the Corporation or its agent. Such proof for the authenticity of the signatures
as the Corporation or its agent may reasonably require shall be provided.
Section 3. LOST, STOLEN, DESTROYED AND MUTILATED CERTIFICATES. The
holder of any stock of the Corporation shall immediately notify the Corporation
of any loss, theft, destruction or mutilation of any certificate therefor, and
the Board of Directors may, in its discretion, cause to be issued to him a new
certificate or certificates of stock, upon the surrender of the mutilated
certificate or in case of loss, theft or destruction of the certificate upon
satisfactory proof of such loss, theft, or destruction; and the Board of
Directors may, in its discretion, require the owner of the lost, stolen or
destroyed certificate, or his legal representatives, to give to the Corporation
and to such registrar or transfer agent as may be authorized or required to
countersign such new certificate or certificates a bond, in such sum as they may
direct, and with such surety or sureties, as they may direct, as indemnity
against any claim that may be made against them or any of them on account of or
in connection with the alleged loss, theft, or destruction of any such
certificate.
Section 4. RECORD DATE. The Board of Directors may fix in advance, a
date as the record date for the purpose of determining stockholders entitled to
notice of, or to vote at, any meeting of stockholders, or stockholders entitled
to receive payment of any dividend or the allotment of any rights, or in order
to make a determination of stockholders for any other proper purpose. Such date,
in any case, shall be not more than 90 days, and in case of a meeting of
stockholders, not less than 10 days, prior to the date on which the particular
action requiring such determination of stockholders is to be taken. In lieu of
fixing a record date, the Board of Directors may provide that the stock transfer
books shall be closed for a stated period but not to exceed, in any case, 20
days prior to the date of any meeting of stockholders or the date for payment of
any dividend or the allotment of rights. If the stock transfer books are closed
for the purpose of determining stockholders entitled to notice of or to vote at
a meeting of stockholders, such books shall be closed for at least 10 days
immediately preceding such meeting. If no record date is fixed and the stock
transfer books are not closed for determination of stockholders, the record date
for the determination of stockholders entitled to notice of, or to vote at, a
meeting of stockholders shall be at the close of business on the day on which
notice of the meeting is mailed or the day 30 days before the meeting, whichever
is closer date to the mailing, and the record date for the determination of
stockholders entitled to receive payment of a dividend or an allotment of any
rights is adopted, provided that the payment or allotment date shall not be more
than 90 days after the date of the adoption of such resolution.
ARTICLE VI
CORPORATE BOOKS
The books of the Corporation, except the original or a duplicate stock
ledger, may be kept outside the State of Maryland at such place or places as at
the Board of Directors may from time to time determine. The original or
duplicate stock ledger shall be maintained at the office of the Corporation's
transfer agent.
ARTICLE VII
SIGNATURES
Except as otherwise provided in these By-laws or as the Board of
Directors may generally or in particular cases authorize the execution thereof
in some other manner, all deeds, leases, transfers, contracts, bonds, notes,
checks, drafts and other obligations made, accepted or endorsed by the
Corporation and all endorsements, assignments, transfers, stock powers or other
instruments of transfer of securities owned by or standing in the name of the
Corporation shall be signed or executed by two officers of the Corporation, who
shall be the Chairman of the Board, the President or a Vice President and a Vice
President, the Secretary or the Treasurer.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall be established by resolution
of the Board of Directors of the Corporation.
ARTICLE IX
CORPORATE SEAL
The corporate seal of the Corporation shall consist of a flat faced
circular die with the word "Maryland" together with the name of the Corporation,
the year of its organization, and such other appropriate legend as the Board of
Directors may from time to time determine, cut or engraved thereon. In lieu of
the corporate seal, when so authorized by the Board of Directors or a duly
empowered committee thereof, a fascimile thereof may be impressed or affixed or
reproduced.
ARTICLE X
INDEMNIFICATION
As part of the consideration for agreeing to serve and serving as a
director of the Corporation, each director of the Corporation shall be
indemnified by the Corporation against every judgement, penalty, fine,
settlement, and reasonable expense (including attorneys' fees) actually incurred
by the director in connection with any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, in
which the director was, is, or is threatened to be made a named defendant or
respondent (or otherwise becomes a party) by reason of such director's service
in that capacity or status as such, and the amount of every such judgement,
penalty, fine, settlement and reasonable expense so incurred by the director
shall be paid by the Corporation or, if paid by the director, reimbursed to the
director by the Corporation, subject only to the conditions and limitations
imposed by the applicable provisions of Section 2-418 of the Corporations and
Associations Article of the Annotated Code of the State of Maryland and by the
provisions of Section 17(h) of the United States Investment Company Act of 1940
as interpreted and as required to be implemented by Securities and Exchange
Commission Release No. IC-11330 of September 4, 1980. The foregoing shall not
limit the authority of the Corporation to indemnify any of its officers,
employees or agents to the extent consistent with applicable law.
ARTICLE XI
AMENDMENTS
All By-laws of the Corporation shall be subject to alteration,
amendment, or repeal, and new By-laws not inconsistent with any provision of the
Articles of Incorporation of the Corporation may be made, either by the
affirmative vote of the holders of record of a majority of the outstanding stock
of the Corporation entitled to vote in respect thereof, given at an annual
meeting or at any special meeting, provided notice of the proposed alteration,
amendment, or repeal of the proposed new By-laws is included in or accompanies
the notice of such meeting, or by the affirmative vote of a majority of the
whole Board of Directors given at a regular or special meeting of the Board of
Directors, provided that the notice of any such special meeting indicates that
the By-laws are to be altered, amended, repealed, or that new By-laws are to be
adopted.
