1940 Act File No. 811-2145
1933 Act File No. 333-01389
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
Form N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. __
[X] Post-Effective Amendment No. 1
Lord Abbett Bond-Debenture Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
The General Motors Building, 767 Fifth Avenue
New York, New York 10153
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: 800-426-1130
Kenneth B. Cutler
Vice President and Secretary
Lord Abbett Bond-Debenture Fund, Inc.
The General Motors Building
767 Fifth Avenue
New York, New York 10153
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of the registration statement.
No filing fee is required because an indefinite number of shares are being
registered pursuant to Rule 24f-2 under the Investment Company Act of 1940.
It is proposed that this filing will become
effective on the date of filing pursuant to
paragraph (b) of Rule 485.
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<PAGE>
Lord Abbett Bond-Debenture Fund, Inc.
CROSS-REFERENCE SHEET
ITEMS REQUIRED BY FORM N-14
Part A
<TABLE>
Item No. Item Caption Prospectus Caption
- -------- ------------ ------------------
<S> <C> <C>
1. Beginning of Registration Statement and Outside Cover Page of Registration Statement;
Front Cover Page of Prospectus Cover Page of Proxy Statement and
Prospectus
2. Beginning and Outside Back Cover Page of Table of Contents
Prospectus
3. Fee Table, Synopsis and Risk Factors Fee Table; Summary of Proposal
4. Information about the Transaction Summary of Proposal;
5. Information about the Registrant Summary of Proposal; Comparative
Information about the Acquiring Fund
and the Acquired Fund; Additional
Information; Prospectus of Lord
Abbett Bond-Debenture Fund, Inc.
dated May 1, 1995
6. Information about the Company Being Acquired Summary of Proposal; Comparative
Information about the Acquiring Fund
and the Acquired Fund
7. Voting Information Special Meeting of Shareholders of
the Trust; Notice of Special Meeting
of Shareholders; Summary of
Proposal
8. Interest of Certain Persons and Experts Miscellaneous
9. Additional Information Required for Reoffering Not Applicable
by Persons Deemed to be Underwriters
</TABLE>
<PAGE>
<TABLE>
<S>
Part B Statement of Additional
Item No. Item Caption Information Caption
- -------- ------------ -----------------------
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Not Applicable
12. Additional Information about the Registrant Cover Page of Proxy Statement and
Prospectus;
Acquiring Fund
State ment of
Additional
Information incor
porated by
reference.
13. Additional Information about the Company Being Cover Page of Proxy Statement and
Acquired Prospectus; Acquired Fund Statement
of Additional Information incor
porated by reference.
14. Financial Statements Pro-forma Financial Statements
Part C
Item No. Part C Caption
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15. Indemnification Indemnification
16. Exhibits Exhibits
17. Undertakings Undertakings
Signatures
</TABLE>
<PAGE>
Lord Abbett Securities Trust - Lord Abbett Bond-Debenture Trust
Dear Shareholder:
You are cordially invited to attend the Special Meeting of
Shareholders of Lord Abbett Securities Trust scheduled to be held on June 19,
1996, at 11:00 a.m., at the General Motors Building, 767 Fifth Avenue, New York,
New York. Your Board of Trustees looks forward to greeting those shareholders
who are able to attend.
At the meeting, in addition to the appointment of auditors, you will
be asked to approve or disapprove a proposal to combine your Fund with another
Lord Abbett fund which has an investment objective and policies substantially
similar to those of your Fund. The investment policies of the other fund are
proposed to be changed to provide greater uniformity among the Lord
Abbett-sponsored funds and greater flexibility in the management of your Fund's
portfolio.
Such proposal, if approved, will eliminate the offering of
substantially identical funds, as well as take advantage of potential economies
of scale. In addition, the proposed combination will be a tax-free
reorganization for federal income tax purposes. Such proposal is fully described
in the enclosed proxy statement and prospectus. I encourage you to review the
proxy statement and prospectus for all the details regarding the meeting agenda.
Your Board of Trustees believes the matters proposed in the agenda
are in the best interests of the Fund and its shareholders and unanimously
recommends a vote "for" each proposal. Regardless of the number of shares you
own, it is important that they be represented and voted. Accordingly, please
sign, date and mail the enclosed proxy card in the postage paid return envelope.
If you have any questions regarding the meeting agenda or need assistance in
voting, please contact our proxy solicitor, D.F. King & Co., Inc., at
1-800-207-3156.
Your prompt response will help save the Fund the expense of
additional solicitation.
Sincerely,
/s/ RONALD P. LYNCH
Ronald P. Lynch
Chairman of the Board
April 24, 1996
<PAGE>
LORD ABBETT SECURITIES TRUST -
LORD ABBETT BOND-DEBENTURE TRUST
767 Fifth Avenue
New York, New York 10153
Notice to shareholders of Lord Abbett Bond- April 24, 1996
Debenture Trust (the "Acquired Fund") of a
Special Meeting of shareholders of Lord Abbett
Securities Trust to be held on June 19, 1996
Notice is given hereby to the shareholders of the Acquired Fund of a special
meeting of the shareholders of Lord Abbett Securities Trust. The meeting will be
held in the offices of Lord, Abbett & Co., on the 11th floor of The General
Motors Building, 767 Fifth Avenue, New York, New York on June 19, 1996, at 11:00
a.m. for the following purposes and to transact such other business as may
properly come before the meeting and any adjournments thereof.
ITEM 1. To consider and act upon an Agreement and Plan of Reorganization
between the Acquired Fund, a series of Lord Abbett Securities Trust, and Lord
Abbett Bond-Debenture Fund, Inc. (the "Acquiring Fund") providing for (a) the
transfer of all of the assets of the Acquired Fund to the Acquiring Fund in
exchange for shares of a new class of the Acquiring Fund (to be designated
"Class C Shares") and the assumption by the Acquiring Fund of all of the
liabilities of the Acquired Fund, (b) the distribution of such Class C Shares to
the shareholders of the Acquired Fund and (c) the subsequent termination of the
Acquired Fund. (The investment policies and restrictions of the Acquiring Fund
are expected to differ from those of the Acquired Fund in ways that are intended
to provide greater flexibility in the management of the portfolio of the
Acquiring Fund and to provide greater uniformity in the investment policies and
restrictions among the various Lord Abbett-sponsored funds.) A vote in favor of
this Item 1 will be deemed to be a vote to authorize the Acquired Fund, as the
sole shareholder of Class C Shares prior to this reorganization, to approve a
proposed distribution plan pursuant to Section 12 of the Investment Company Act
of 1940, as amended, and Rule 12b-1 thereunder applicable to that class.
ITEM 2. To ratify the selection of Deloitte & Touche LLP as the independent
public accountants of the Lord Abbett Securities Trust for the current fiscal
year.
By order of the Board of Trustees
Kenneth B. Cutler
Vice President and Secretary
<PAGE>
The Board of Trustees has fixed the close of business on March 22, 1996 as the
record date for determination of shareholders of the Acquired Fund entitled to
notice of and to vote at the meeting. Shareholders are entitled to one vote for
each share held. As of March 22, there were 37,786,702 shares of the Acquired
Fund and 138,028,692 shares of Lord Abbett Securities Trust issued and
outstanding.
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PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
SIGN, DATE AND RETURN IT IN THE ENVELOPE PROVIDED.
TO SAVE THE COST OF ADDITIONAL SOLICITATIONS, PLEASE MAIL YOUR PROXY
PROMPTLY.
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<PAGE>
Proxy Statement and Prospectus Dated April 24, 1996
Acquisition of the Assets of
Lord Abbett Bond-Debenture Trust, a series of
Lord Abbett Securities Trust
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
by and in exchange for Class C Shares of
Lord Abbett Bond-Debenture Fund, Inc.
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
This Proxy Statement and Prospectus relates to Class C shares (the "Class C
shares") of Lord Abbett Bond-Debenture Fund, Inc. (the "Acquiring Fund") to be
issued to, and in exchange for all the assets of, Lord Abbett Bond-Debenture
Trust (the "Acquired Fund") and, together with the Acquiring Fund, the "Funds"),
a series of Lord Abbett Securities Trust (the "Trust"). The telephone number of
the principal executive office of each of the Funds is 1-800-426-1130. In
exchange for such assets, the Acquiring Fund will also assume all of the
liabilities of the Acquired Fund. Following receipt of the Acquiring Fund Class
C shares, the Acquired Fund will be terminated and the Class C shares will be
distributed to the shareholders of the Acquired Fund. The shareholders of the
Acquired Fund are being asked to vote to approve or disapprove these proposed
transactions (the "Reorganization"), which are more fully described in this
Proxy Statement and Prospectus.
The Acquiring Fund and the Trust are open-end diversified investment
management companies. The Acquiring Fund and the Acquired Fund have
substantially similar investment objectives. The Acquiring Fund seeks high
current income and the opportunity for capital appreciation to produce a high
total return through a professionally-managed portfolio consisting primarily of
convertible and discount debt securities, many of which are lower rated. The
Acquired Fund seeks to achieve a high total return (current income and capital
appreciation) from an actively-managed, diversified debt-security portfolio.
Under normal circumstances, the Acquired Fund invests at least 65% of its total
assets in bonds and/or debentures and seeks unusual values, particularly in
lower-rated debt securities, sometimes referred to as "junk bonds," some of
which are convertible into common stocks or have warrants to purchase common
stocks. Lord, Abbett & Co. ("Lord Abbett") serves as investment manager to both
Funds and will continue to serve as the investment manager of the Acquiring Fund
after the Reorganization.
Any shareholder having a question regarding the meeting agenda or needing
assistance in voting, should contact the Acquired Fund's proxy solicitor, D.F.
King & Co., Inc., at 1-800-207-3156.
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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.
<PAGE>
The Class C shares of the Acquiring Fund will be a newly-created class of
shares that will share pro-rata with the existing class of Acquiring Fund shares
(the "Class A shares") in the portfolio, income and expenses of the Acquiring
Fund, except that each class will bear the expense of its own distribution and
shareholder servicing arrangements and certain other expenses. See "Information
about the Reorganization -- Shares of the Acquiring Fund." The distribution and
shareholder servicing arrangements for the Class C shares will be substantially
the same as the arrangements currently applicable to the Acquired Fund shares.
The trustees of the Trust believe that the proposed transaction will enable the
shareholders of the Acquired Fund to benefit from economies of scale while
continuing to invest in a portfolio of securities managed by Lord Abbett under
an investment objective substantially similar to that of the Acquired Fund. See
"Information about the Reorganization -- Reasons for the Reorganization."
This Proxy Statement and Prospectus sets forth concisely the information
about the Acquiring Fund that a shareholder of the Acquired Fund should know
before voting on the Reorganization. It should be read and retained for future
reference. Attached as Exhibit A to this Proxy Statement and Prospectus is a
copy of the Agreement and Plan of Reorganization (the "Plan") for the
Reorganization. This Proxy Statement and Prospectus is accompanied by the
Prospectus of the Acquiring Fund dated May 1, 1995 (the "Acquiring Fund
Prospectus"), which Prospectus is incorporated by reference herein. Also
incorporated herein by reference are (a) the Statement of Additional Information
dated the date hereof relating to this Proxy Statement and Prospectus, including
the Statement of Additional Information of the Trust dated March 1, 1996 and the
Statement of Additional Information of the Acquiring Fund dated May 1, 1995, and
(b) the Prospectus of the Trust dated March 1, 1996 (the "Acquired Fund
Prospectus"). Such Statements of Additional Information and the Acquired Fund
Prospectus are available, upon oral or written request, and at no charge, from
the Acquiring Fund, at its above-noted address or by calling 1-800-874-3733.
<PAGE>
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TABLE OF CONTENTS
SPECIAL MEETING OF SHAREHOLDERS OF THE TRUST...................................2
FEE TABLE......................................................................4
ITEM 1. - APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION...............5
SUMMARY OF PROPOSAL................................................5
INFORMATION ABOUT THE REORGANIZATION...............................7
COMPARATIVE INFORMATION ABOUT THE
ACQUIRING FUND AND THE ACQUIRED FUND..............................11
REQUIRED VOTE.....................................................14
ITEM 2. - RATIFICATION OR REJECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS....................................14
ADDITIONAL INFORMATION........................................................15
Exhibit A - Agreement and Plan of Reorganization
Exhibit B - Comparison of Certain Investment Policies and Restrictions
<PAGE>
SPECIAL MEETING OF SHAREHOLDERS OF THE TRUST
This Prospectus and Proxy Statement is furnished in connection with the
solicitation of proxies by and on behalf of the Board of Trustees of the Trust
to be used at a Special Meeting of Shareholders of the Trust to be held at 11:00
a.m. on June 19, 1996, at the offices of Lord Abbett on the 11th floor of the
General Motors Building, 767 Fifth Avenue, New York, New York 10153, and at any
adjournments thereof. This Prospectus and Proxy Statement and the enclosed proxy
card are first being mailed to shareholders of the Acquired Fund on or about
April 24, 1996.
At the close of business on March 22, 1996 (the "Record Date"), there were
issued and outstanding 37,786,702 shares of the Acquired Fund and 138,028,692
shares of the Trust. Only shareholders of record as of the close of business on
the Record Date will be entitled to notice of, and to vote at, the meeting or
any adjournment thereof. Shareholders of the Trust are entitled to one vote for
each share. Under Delaware law, shares owned by two or more persons (whether as
joint tenants, co-fiduciaries or otherwise) will be voted as follows, unless a
written instrument or court order providing to the contrary has been filed with
the Secretary of the Trust: (1) if only one votes, that vote binds all; (2) if
more than one votes, the vote of the majority binds all; and (3) if more than
one votes and the vote is evenly divided, the vote will be cast proportionately.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked thereon. A
proxy may be revoked by the signer at any time at or before the meeting by
written notice to the Trust, by execution of a later-dated proxy or by voting in
person at the meeting. Unless revoked, all valid proxies will be voted in
accordance with the specifications thereon or, in the absence of such
specifications, FOR approval of the Plan and the Reorganization, FOR
ratification of the selection of Deloitte & Touche as the Trust's independent
public accountants and on any other matters as deemed appropriate.
Proxies will be solicited by mail. Additional solicitations may be made by
telephone, facsimile or personal contact by officers or employees of Lord Abbett
and its affiliates. The Trust may also request brokerage houses, custodians,
nominees, and fiduciaries who are shareholders of record to forward proxy
material to the beneficial owners. D.F. King & Co. has been retained to assist
in the solicitation of proxies at an estimated cost of $12,000. The cost of the
solicitation will be borne by the Acquired Fund.
In the event that sufficient votes to approve the Plan are not received by
the meeting date, the persons named as proxies may propose one or more
adjournments of the meeting to permit further solicitation of proxies. In
determining whether to adjourn the meeting, the following factors may be
considered: the percentage of votes actually cast, the percentage of negative
votes actually cast and the nature of any further solicitation and any
information to be provided to shareholders with respect to such a solicitation.
Any such adjournment will require an affirmative vote of a majority of the
shares present in person or by proxy and entitled to vote at the meeting. The
persons named as proxies will vote upon such adjournment after consideration of
the best interests of all shareholders.
2
<PAGE>
If the Plan is not approved by the shareholders of the Acquired Fund, or if
the Reorganization is not consummated for any other reason, the Acquired Fund
will continue to engage in business as a series of the Trust.
3
<PAGE>
FEE TABLE
Set forth below is a summary of the expenses of the shares of the Acquiring
Fund (currently, the only class of Acquiring Fund shares, to be designated
"Class A"). Also set forth below is a summary comparison of the expenses of (a)
the shares of the Acquired Fund and (b) on a pro-forma basis after giving effect
to the Reorganization, the Class C shares of the Acquiring Fund (to be issued in
the Reorganization in exchange for the shares of the Acquired Fund). The annual
operating expenses shown in the summaries for the Acquiring Fund shares and the
Acquired Fund shares are the actual expenses for the fiscal years ended December
31, 1995 and October 31, 1995, respectively, and those shown on a pro-forma
basis for the Class C shares of the Acquiring Fund are the estimated expenses of
such shares for the year ended December 31, 1995 had the Reorganization occurred
on January 1, 1995. The example set forth below is not a representation of past
or future expenses. Actual expenses may be greater or less than those shown.
<TABLE>
<CAPTION>
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Acquiring Fund shares Acquiring Fund
Shareholder Transaction Expenses (to be designated Class C shares
(as a percentage of offering price) Class A) Acquired Fund shares (pro-forma)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Load on Purchases(1)....... 4.75%(2) None(3) None(3)
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Deferred Sales Load (1).................. None(2) 1.00%(4) 1.00%(4)
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Annual Operating Expenses
(as a percentage of average net assets)
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Management Fee........................ 0.47% 0.50% 0.46%(3)
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Rule 12b-1 Fees....................... 0.21(2) 0.91(3) 0.91(3)
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Other Expenses........................ 0.14 0.26 0.14
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Total Operating Expenses.................... 0.82 1.67 1.51
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</TABLE>
Example: Assume each Fund's annual return is 5% and there is no change in
the level of expenses described above. For every $1,000 after the number of
invested, with reinvestment of all distributions, you would pay the following
total expenses if you closed your account years indicated.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Acquiring Fund Class A shares (5) $55 $72 $91 $144
Acquired Fund shares (5) $17 $53 $91 $198
Acquiring Fund Class C shares $15 $48 $82 $180
(pro-forma)(5)
</TABLE>
(1) Sales "load" is referrred to as sales "charge" and "deferred sales load" is
referred to as "contingent deferred reimbursement charge" throughout this
Proxy Statement and Prospectus.
(2) See "Purchases" in the Acquiring Fund Prospectus accompanying this Proxy
Statement and Prospectus for descriptions of the front end sales charges
and the 1% contingent deferred reimbursement charges payable on sales and
certain redemptions of these shares and the Rule 12b-1 plan applicable to
the shares of the Acquiring Fund.
(3) Although the Acquiring Fund does not, and the Acquiring Fund will not with
respect to the Class C shares, charge a front end sales charge, investors
should be made aware that long term shareholders may pay, under the Rule
12b-1 plan of the acquired fund and under the Rule 12b-1 plan to be
applicable to the Class C shares of the Acquiring Fund ( which pays and
will pay annual 0.25% service and 0.75% distribution fees ), more than the
economic equivialent of the maximum front end sales charge as permitted by
certain rules of thew National Association of Securities Dealers, Inc. The
pro-forma Class C share management fee is lower than the actual fee for the
fiscal year ended December 31, 1995 because the addition of the Acquired
Fund assets in the pro-forma calculation increased the average net assets
of the Acquiring Fund further above the break-point where the management
fee declines from 0.50% to 0.45%.
(4) Redemptions of the Acquired Fund shares are, and redemptions of the Class C
shares will be, subject to a 1% contingent deferred reimbursement charge if
the redemption occurs before the first anniversary of the shares purchase.
Holding periods for shares purchased prior to the Reorganization will carry
over for the purpose of determining the applicability of the CDRC to Class
C shares.
(5) Based on the total actual operating expenses and pro-forma operating
expenses shown in the table above
The foregoing is provided to assist shareholders of the Acquired Fund in
understanding the various expenses the holders of the shares of the Acquiring
Fund and the holders of shares of the Acquired Fund have incurred and that
holders of the shares of the Acquired Fund might incur as holders of the Class C
shares following the Reorganization.
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4
<PAGE>
ITEM 1. - APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY OF PROPOSAL
The following is a summary of certain information contained elsewhere or
incorporated by reference in this Proxy Statement and Prospectus and is
qualified in its entirety by reference to such information.
Overview of Proposed Reorganization. The Plan provides for the transfer to the
Acquiring Fund of all of the assets of the Acquired Fund in exchange for Class C
shares and the assumption by the Acquiring Fund of all of the liabilities of the
Acquired Fund. The Class C shares will then be distributed to the Acquired Fund
shareholders and the Acquired Fund will be terminated. As a result of the Reor
ganization, each shareholder of the Acquired Fund will become the owner of that
number of full and fractional Class C shares having an aggregate net asset value
equal to the aggregate net asset value of his or her shares of the Acquired
Fund, as of the close of business on the date the Acquired Fund assets are
transferred to the Acquiring Fund. Consummation of the Reorganization is subject
to the approval of the Acquired Fund's shareholders and other conditions,
including Acquiring Fund shareholder approval of an amendment to its Articles of
Incorporation authorizing the creation of the Class C shares.
To avoid a need to call an Acquiring Fund shareholders' meeting after the
Reorganization, shareholders of the Acquired Fund are being asked to authorize
the Acquired Fund, as the sole Class C shareholder of the Acquiring Fund before
the Reorganization, to approve the proposed distribution plan for the Class C
shares. A vote in favor of the Reorganization will be deemed also to be a vote
to authorize the Acquired Fund to take such action.
The trustees of the Acquired Fund believe that the proposed Reorganization
will enable the shareholders of the Acquired Fund to benefit from economies of
scale while continuing to invest in a portfolio of securities managed by Lord
Abbett under the same investment objective. See "Information about the
Reorganization -- Reasons for Reorganization" for additional information about
the reasons for the Reorganization.
Businesses of the Acquired and Acquiring Funds. The Acquired Fund is a
diversified series of the Trust, an open-end management investment company
organized as a Delaware business trust under an Agreement and Declaration of
Trust dated February 26, 1993. The Trust offers ten series, one of which is the
Acquired Fund, each consisting of one class of shares. The Acquired Fund
commenced investment operations on January 3, 1994. As of December 31, 1995, the
Acquired Fund's net assets were approximately $148 million.
The Acquiring Fund is an open-end, diversified, management investment
company organized in 1970 and reincorporated under Maryland law on January 23,
1976. To date, the Acquiring Fund has offered only one class of shares. As of
December 31, 1995, the Acquiring Fund's net assets were approximately $1.34
billion.
5
<PAGE>
Investment Objectives and Policies of the Acquired Fund and the Acquiring Fund.
The Acquired Fund and Acquiring Fund have substantially similar investment
objectives. The Acquiring Fund seeks high current income and the opportunity for
capital appreciation to produce a high total return through a
professionally-managed portfolio consisting primarily of convertible and
discount debt securities, many of which are lower rated. The Acquired Fund seeks
to achieve a high total return (current income and capital appreciation) from an
actively-managed, diversified debt-security portfolio. Under normal
circumstances, the Acquired Fund invests at least 65% of its total assets in
bonds and/or debentures and seeks unusual values, particularly in lower-rated
debt securities, sometimes referred to as "junk bonds," some of which are
convertible into common stocks or have warrants to purchase common stocks. The
two Funds also have generally similar investment policies and restrictions. The
Acquiring Fund is seeking to revise and reclassify certain of its investment
policies and restrictions in order to provide greater flexibility in managing
the investment portfolio of the Acquiring Fund and to provide greater uniformity
in the investment policies and restrictions among the various Lord
Abbett-sponsored funds. Most importantly, a number of the investment policies
and restrictions that are classified as fundamental for the Acquired Fund are to
be reclassified as non-fundamental for the Acquiring Fund. See "Comparative
Information About the Acquiring Fund and the Acquired Fund -- Investment
Objectives, Policies and Restrictions."
The portfolio of the Acquired Fund is expected to be suitable for the
Acquiring Fund, and so no significant realignment of that portfolio is expected
in connection with the Reorganization.
Purchases and Exchanges. Shares of the Acquired Fund are, and Class C shares
will be, available through certain authorized dealers at the public offering
price, which is the net asset value per share. See "Information about the
Reorganization -- Shares of the Acquiring Fund." Shareholders of the Acquired
Fund may now exchange their shares for shares of the other nine series of the
Trust and for the shares of Lord Abbett U.S. Government Securities Money Market
Fund, Inc. It is expected that holders of Class C shares will be able to
exchange their shares for Class C shares of up to 13 other funds and series
managed by Lord Abbett. Each exchange represents a sale of shares for which a
shareholder may have to recognize a gain or loss under Federal income tax
provisions.
Rule 12b-1 Plan. The Acquired Fund has adopted a plan pursuant to Section 12(b)
of the Investment Company Act of 1940 (the "1940 Act") and Rule 12b-1 thereunder
(a "Rule 12b-1 Plan"), under which it pays service and distribution fees at the
time shares are sold not to exceed 1% of the net asset value of such shares and
at each quarter-end after the first anniversary of the sale of shares at an
annual rate not to exceed 1% of the net asset value of such shares then
outstanding. As part of the Reorganization, the Acquiring Fund will adopt a Rule
12b-1 Plan applicable to the Class C shares that will be substantially the same
as the Acquired Fund's Rule 12b-1 Plan, except as noted below under "Information
about the Reorganization -- Rule 12b-1 Plan".
Dividend Policies and Options. The Acquired Fund distributes net investment
income monthly as a dividend. It may also pay supplemental dividends and capital
gains distributions in December or January. The Acquiring Fund has a similar
dividend and distribution policy. The shareholders of each Fund may reinvest
such dividends and distributions in additional shares at net asset value or take
such amounts in cash.
6
<PAGE>
Redemption Procedures. The redemption procedures of the Acquired Fund and
the Acquiring Fund are substantially the same. See the Acquiring Fund Prospectus
under "Redemptions."
Tax Considerations. The consummation of the Reorganization is subject to
receipt of an opinion of counsel, substantially to the effect that, among other
things, the Reorganization will not cause a gain or loss to be recognized by the
Acquired Fund or its shareholders for federal income tax purposes. See
"Information about the Reorganization--Federal Income Tax Considerations."
Risk Factors. Because of the similarities in the investment objectives of the
Funds, Lord Abbett believes that the relative risks involved in investing in the
Funds can be considered similar. However, the investment policies and
restrictions of the Acquiring Fund have been made less restrictive compared to
those of the Acquired Fund in order to provide greater flexibility in the future
management of the investment portfolio of the Acquiring Fund and to provide
greater uniformity in the investment policies and restrictions among the various
Lord Abbett-sponsored funds. If the Acquiring Fund were to take to any
significant extent the actions permitted by these less restrictive policies and
restrictions, a result not now anticipated, the risks of investing in the
Acquiring Fund could be greater than those involved in investing in the Acquired
Fund. See "Comparative Information About the Acquiring Fund and the Acquired
Fund -- Investment Objectives, Policies and Restrictions".
INFORMATION ABOUT THE REORGANIZATION
The Plan. On July 12, 1996, assuming the conditions referred to below are
satisfied, the Acquired Fund will transfer all its assets to the Acquiring Fund
(the date of such transfer is referred to herein as the "Closing Date") in
exchange for (i) Class C shares of the Acquiring Fund having an aggregate net
asset value equal to the aggregate value of the assets, less liabilities, of the
Acquired Fund and (ii) the assumption by the Acquiring Fund of all the
liabilities of the Acquired Fund. The Acquired Fund will distribute as of the
Closing Date such Class C shares pro-rata to its shareholders of record,
determined as of the close of business on the Closing Date, in redemption and
cancellation of their shares of the Acquired Fund. The net asset value of Class
C shares and the value of the Acquired Fund's assets and the amount of its
liabilities will be determined as of the Closing Date in accordance with the
valuation procedures set forth in the Acquiring Fund's Articles of Incorporation
(see "Purchases" in the Acquiring Fund Prospectus). The valuation procedures
used by the Acquiring Fund are the same as those used by the Acquired Fund.
The obligations of the Acquiring Fund and the Acquired Fund to consummate
the Reor ganization are subject to the satisfaction of certain conditions
precedent, including (a) approval and authorization of the Reorganization by the
vote of a majority of the shares of the Acquired Fund voted on the matter if a
quorum is present, (b) receipt of a favorable ruling from the Internal Revenue
Service to the effect that the issuance of various classes of shares by the
Acquiring Fund will not result in dividends or distributions of the Acquiring
Fund constituting "preferential dividends" under the Internal Revenue Code of
1986, as amended (the "Code"), (c) receipt of a favorable opinion of legal
counsel as to the federal income tax consequences of the proposed transaction as
described below under "Federal
7
<PAGE>
Income Tax Considerations", and (d) approval by the shareholders of the
Acquiring Fund of an amendment to its Articles of Incorporation authorizing the
creation of additional classes of shares.
The foregoing summary of the Plan does not purport to be complete, and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the Plan, a copy of which is attached as Exhibit A.
Reasons for the Reorganization. The Board of Trustees of the Trust and the Board
of Directors of the Acquiring Fund, including in each case a majority who are
not "interested persons" (as defined in the 1940 Act) of either Fund or of Lord
Abbett, approved the Plan and the Reorganization on March 14, 1996, and in this
connection determined that participation in the proposed Reorganization is in
the best interests of the shareholders of each of the Funds and that the
interests of existing shareholders of the Funds will not be diluted as a result
of the Reorganization. In doing so, the boards of the two Funds considered the
estimated expenses to be incurred by the Funds in connection with the
Reorganization and several other factors, including (a) that the shareholders of
the Acquired Fund are expected to benefit from economies of scale as
shareholders of the larger Acquiring Fund, while continuing to invest in a
portfolio of securities managed by Lord Abbett under a substantially similar
investment objective, and (b) that the implementation of a multi-class fund
structure for the Acquiring Fund is expected to (i) enable investors in the
Acquiring Fund to choose the distribution option that best suits their
individual situations, (ii) facilitate distribution of the Acquiring Fund's
shares, and (iii) maintain the competitive position of the Acquiring Fund in
relation to other funds that have implemented or are seeking to implement
similar distribution arrangements.
The trustees of the Trust and the directors of the Acquiring Fund are the
same individuals.
Shares of the Acquiring Fund. On or before the Closing Date, the Acquiring Fund
will have two classes of shares, Class A shares (the existing class of the
Acquiring Fund) and Class C shares (to be received by the shareholders of the
Acquired Fund in the Reorganization). Each share of the Acquiring Fund,
regardless of class, will share pro-rata (based on net asset value) in the
portfolio and income of the Acquiring Fund and in the Acquiring Fund's expenses,
except for differences in expenses resulting from different Rule 12b-1 Plans for
the classes and certain other class specific expenses. See "Rule 12b-1 Plans"
below. After the Reorganization, Class C shares will be offered at net asset
value without an initial sales charge but if redeemed for cash before the first
anniversary of purchase, will be subject to a contingent deferred reimbursement
charge (a "CDRC") equal to 1% of the lower of their cost or then net asset
value. Holding periods for shares purchased prior to the Reorganization will
carry over for the purpose of determining the applicability of the CDRC.
After the Closing Date, the Acquiring Fund may create and issue one or more
classes of shares in addition to the Class A and C shares. Lord Abbett has
advised the Board of Directors of the Acquiring Fund that it intends to propose
to the board in the near future that the board authorize the Acquiring Fund to
issue a third class of shares, to be designated the "Class B shares". If
authorized, the Class B shares are expected to be sold without an initial sales
charge and otherwise to be similar to the Class C shares except that (i) they
will be subject to a contingent deferred sales charge ("CDSC") that is payable
to the distributor of such shares, rather than subject to a contingent deferred
reimbursement charge payable to the Acquiring Fund, as is the case with the
Class C shares, (ii) the B-share CDSC will be substantially
8
<PAGE>
larger than the 1% CDRC charged on early redemptions of Class C shares, (iii)
the B-share CDSC will apply over a period of time substantially longer than the
12 months applicable to the C-share CDRC, and will scale down to zero over that
longer period, and (iv) the Class B shares will convert automatically into A
shares at net asset value after a period of time.
Shares of all classes of the Acquiring Fund will vote together on all
matters affecting the Acquiring Fund, except for matters, such as approval of a
Rule 12b-1 Plan, affecting only a particular class or classes. All shares voting
on a matter will have identical voting rights. All issued shares of the
Acquiring Fund are fully paid and non-assessable, and shareholders have no
preemptive or other right to subscribe to any additional shares. All shares
within a series will have the same rights and be subject to the same limitations
with respect to dividends, redemptions and liquidation except for differences
resulting from class-specific Rule 12b-1 plans and related service plans and
certain other class-specific expenses.
Rule 12b-1 Plans. The Acquiring Fund is adopting a Rule 12b-1 Plan for the Class
C shares (the "Class C 12b-1 Plan") substantially the same as the plan currently
in effect for the Acquired Fund, except for the changes noted below. The
Acquired Fund's plan provides for payments to dealers through Lord Abbett of
distribution and service fees (a) at the time shares are sold, not to exceed
0.75% and 0.25%, respectively, of the net asset value of the shares sold and (b)
at the end of the quarter following the first anniversary of the sale of shares,
and quarterly thereafter, at an annual rate not to exceed 0.75% and 0.25%,
respectively, of the net asset value of such shares, including any shares issued
for reinvested dividends and distributions after such first anniversary, so long
as such shares remain outstanding. Lord Abbett may retain from the quarterly
distribution fee, for the payment of distribution expenses incurred directly by
it, an amount not to exceed 0.10% of the average annual net asset value of such
shares outstanding. See the Acquired Fund Prospectus under "Purchases" for
additional information concerning the Rule 12b-1 Plan of the Acquired Fund.
There are two substantive changes in the Class C 12b-1 Plan: First,
payments under the plan may be made to all institutions and persons permitted by
applicable law and/or rules to receive such payments ("Authorized
Institutions"), rather than just to dealers, as is the case under the Acquired
Fund's plan; and Second, the other party to the Class C 12b-1 Plan is to be Lord
Abbett Distributor, LLC, a New York limited liability company, to be formed as a
subsidiary of Lord Abbett ("Lord Abbett Dis tributor"), rather than Lord Abbett
itself. Lord Abbett Distributor will take on all the underwriting functions
currently performed directly by Lord Abbett.
The Acquiring Fund will pay smaller Rule 12b-1 distribution and service
fees in connection with the Class A shares. However, the Acquiring Fund will
sell those shares subject to an initial sales charge (see the Acquiring Fund
Prospectus under "Purchases"). The Acquired Fund does not impose, and the
Acquiring Fund will not impose with respect to the Class C shares, an initial
sales charge.
The Class C 12b-1 Plan was approved on March 14, 1996, by the directors of
the Acquiring Fund, including a majority of the directors who are not
"interested persons" of the Acquiring Fund within the meaning of the 1940 Act
and who will have no direct or indirect financial interest in the operations of
such plan or in any agreements related thereto. Prior to the Reorganization, the
Acquired Fund will purchase one Class C share, and as sole shareholder, will
approve the Class C 12b-1 Plan prior to
9
<PAGE>
that class being issued to the Acquired Fund in the Reorganization. A vote
in favor of the Reorganization will be deemed also to be a vote to authorize the
Acquired Fund to take such action.
Federal Income Tax Considerations. The consummation of the Reorganization is
conditioned upon the receipt of an opinion of Debevoise & Plimpton, legal
counsel to the Acquiring Fund and the Acquired Fund, substantially to the effect
that, for Federal income tax purposes:
(a) no gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund in exchange
for Class C shares and the assumption by the Acquiring Fund of the
liabilities of the Acquired Fund or upon the distribution of the Class C
shares to the Acquired Fund's shareholders;
(b) no gain or loss will be recognized by the Acquiring Fund upon
the receipt of the assets of the Acquired Fund in exchange for Class C
shares and the assumption by the Acquiring Fund of the liabilities of the
Acquired Fund;
(c) no gain or loss will be recognized by shareholders of the
Acquired Fund upon the exchange of their Acquired Fund shares for Class C
shares;
(d) the aggregate tax basis of the Class C shares received by any
Acquired Fund shareholder pursuant to the Reorganization will be the same
as the aggregate tax basis of the Acquired Fund shares held by such
shareholder immediately prior to the Reorganization, and the holding
period for the Class C shares to be received by any Acquired Fund
shareholder will include the period during which the Acquired Fund shares
exchanged therefor were held by such shareholder (provided that the
Acquired Fund shares were held as capital assets on the date of the
Reorganization); and
(e) the tax basis of the Acquired Fund's assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the
Acquired Fund immediately prior to the Reorganization, and the holding
period of the assets of the Acquired Fund in the hands of the Acquiring
Fund will include the period during which those assets were held by the
Acquired Fund.
The Funds have not sought a tax ruling from the Internal Revenue Service
with respect to the tax consequences of the Reorganization, but will act in
reliance upon the opinion of counsel. Such opinion is not binding on the
Internal Revenue Service. Since the foregoing discussion relates only to the
general Federal income tax consequences of the Reorganization, shareholders
should also consult their tax advisors as to any state or local tax consequences
of the Reorganization to them and any special circumstances that may apply in
their individual circumstances.
Expenses of the Reorganization. Expenses of the Reorganization, including legal
and accounting expense, the costs of proxy solicitation and the preparation of
this Prospectus and Proxy Statement, will be borne by the Acquired Fund. If the
Reorganization is consummated, the expenses of the Acquired Fund, to the extent
not paid prior to the Closing Date, will be assumed by the Acquiring Fund and
taken into account in determining the net assets of the Acquired Fund for the
purpose of calculating the number of Class C shares to be issued to the Acquired
Fund.
10
<PAGE>
Capitalization. The following table sets forth the capitalization of the
Acquiring Fund and the Acquired Fund as of December 31, 1995, and the pro-forma
capitalization of the Acquiring Fund as if the Reorganization had occurred on
that date:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Class A Class C
Acquiring Acquiring
Fund Fund
Acquiring Fund Acquired Fund (pro-forma - (pro-forma -
(unaudited) (unaudited) unaudited) unaudited)
- ----------------------------------------------------------------------------------------------
(In thousands, except per share values)
<S> <C> <C> <C> <C>
Net Assets................ $1,339,508 $147,638 $1,339,508 $147,638
- ----------------------------------------------------------------------------------------------
Net Asset Value per Share. $ 9.29 $ 4.82 $ 9.29 $ 9.29
- ----------------------------------------------------------------------------------------------
Shares Outstanding: 144,223 30,620 144,223 15,890
- ----------------------------------------------------------------------------------------------
</TABLE>
The foregoing table reflects a pro-forma exchange ratio of approximately
0.5 Class C shares for each Acquired Fund share. If the Reorganization is
consummated, the actual exchange ratio may vary from this ratio due to changes
in the market value of the portfolio securities of both the Acquiring Fund and
the Acquired Fund between December 31, 1995 and the Closing Date, and changes in
the amounts of undistributed net investment income and accrued liabilities of
the Acquiring Fund and the Acquired Fund during that period.
COMPARATIVE INFORMATION ABOUT THE ACQUIRING FUND AND THE ACQUIRED FUND
Fees and Expenses. Both the Acquiring Fund and the Acquired Fund employ Lord
Abbett as their investment manager. Under the management agreement between the
Acquiring Fund and Lord Abbett, the Acquiring Fund pays a monthly fee, based on
average daily net assets for each month, at the annual rate of .5 of 1% of the
Fund's first $500 million of average daily net assets and .45 of such assets
over $500 million. For the fiscal year ended December 31, 1995, the Acquiring
Fund paid Lord Abbett a management fee at an annual rate of 0.47 of 1% of
average daily net assets. This management agreement will continue in effect
following the Reorganization.
Under the management agreement between the Trust and Lord Abbett, the
Trust, on behalf of the Acquired Fund, is obligated to pay a monthly fee at the
annual rate of 0.5 of 1% of average daily net assets. For the fiscal year ended
October 31, 1995, the Acquired Fund paid Lord Abbett a management fee at an
annual rate of 0.50 of 1% of average daily net assets.
As shown under "Fee Table" above, the Reorganization is expected to have a
favorable impact on the expense ratio experienced by the shareholders of the
Acquired Fund. As shown above under "Fee Table," the pro-forma expense ratio for
the Class C shares was 1.51%, compared to the actual expense ratio for such year
of 1.67% for the Acquired Fund.
11
<PAGE>
Investment Objectives, Policies and Restrictions. The Acquired Fund and
Acquiring Fund have substantially similar investment objectives. The Acquiring
Fund seeks high current income and the opportunity for capital appreciation to
produce a high total return through a professionally-managed portfolio
consisting primarily of convertible and discount debt securities, many of which
are lower rated. The Acquired Fund seeks to achieve a high total return (current
income and capital appreciation) from an actively-managed, diversified
debt-security portfolio. Under normal circumstances, the Acquired Fund invests
at least 65% of its total assets in bonds and/or debentures and seeks unusual
values, particularly in lower-rated debt securities, sometimes referred to as
"junk bonds," some of which are convertible into common stocks or have warrants
to purchase common stocks.
The Acquired Fund and the Acquiring Fund have substantially the same
investment policies and restrictions. However, the Acquiring Fund is seeking
approval of its shareholders to simplify and make less restrictive its
investment policies and restrictions in order to provide greater flexibility in
managing its investment portfolio and to provide greater uniformity in the
investment policies and restrictions among the various Lord Abbett-sponsored
funds. A number of the investment policies and restrictions that are classified
as fundamental for the Acquired Fund are to be reclassified as non- fundamental
for the Acquiring Fund. In other instances, certain fundamental restrictions of
the Acquired Fund are to be modified or eliminated in the case of the Acquiring
Fund. Fundamental investment restrictions may not be changed without approval of
the shareholders of a fund and the costs of shareholder meetings for these
purposes generally are borne by the fund and its shareholders. The board may
amend a non-fundamental restriction as it deems appropriate and in the best
interest of the fund and its shareholders, without incurring the costs of
seeking a shareholder vote.
The principal effect for the shareholders of the Acquired Fund of the
proposed changes in the fundamental policies of the Acquiring Fund will be to
permit the Acquiring Fund to take certain actions not now permitted to the
Acquired Fund without obtaining approval of the shareholders. The Acquiring Fund
either will not be permitted to, or does not intend to, take any such action
unless such action is approved by its Board of Directors. The board does not now
intend to approve any such action or to do so in the future unless it deems such
action to be an appropriate means of seeking the Acquiring Fund's investment
objective in the best interests of the Acquiring Fund and its shareholders, in
which case disclosure of the change would be made in the Acquiring Fund's then
current prospectus or statement of additional information or both. Such actions,
none of which the board has a present intention of approving, involve the
following matters, among others: (i) borrowings from banks in amounts up to
one-third of total assets (and up to an additional 5% of total assets for
temporary purposes) and such short-term credits as may be necessary for the
clearance of purchases and sales of portfolio securities; (ii) loans of
portfolio securities to the extent permitted by law; and (iii) purchases and
sales of securities directly or indirectly secured by real estate or interests
therein and of commodities and commodity contracts in accordance with applicable
law so long as registration would not be required as a commodity pool operator
under the Commodity Exchange Act.
A summary comparison of the fundamental and certain non-fundamental
investment policies and restrictions of the Acquired Fund and the Acquiring Fund
and of the Acquiring Fund as proposed to be amended is set forth in Exhibit B to
this Proxy Statement and Prospectus.
12
<PAGE>
For a full discussion and statement of the Acquiring Fund's investment
objectives, policies and restrictions, see "Investment Objective" and "How We
Invest" in the Acquiring Fund Prospectus and "Investment Objective and Policies"
in the Acquiring Fund Statement of Additional Information. For a full discussion
and statement of the Acquired Fund investment objectives, policies and
restrictions, see "Investment Objective" and "How We Invest" in the Acquired
Fund Prospectus and "Investment Objective and Policies" in the Acquired Fund
Statement of Additional Information. The summary comparison set forth in Exhibit
B does not purport to be complete, and is subject in all respects to, and is
qualified in its entirety by reference to, such statements of such policies and
restrictions.
Shareholders' Rights. The Acquiring Fund believes that the rights of the
Acquired Fund shareholders will not change in an adverse way as a result of the
Reorganization. After the Reorganization, the rights of the former shareholders
of the Acquired Fund (Class C shareholders of the Acquiring Fund) will be
governed by the Acquiring Fund's Articles of Incorporation, By-Laws and
applicable Maryland law rather than by the Trust's Declaration of Trust and
By-Laws and applicable Delaware law. The operations of the Acquiring Fund will
continue to be subject to the provisions of the 1940 Act and the rules and
regulations of the Commission thereunder.
The responsibilities, powers and fiduciary duties of the directors of the
Acquiring Fund are substantially the same as those of the trustees of the
Acquired Fund. The Acquiring Fund's By-Laws provide for indemnification of the
directors for actual liabilities arising out of the directors' service in their
capacity as directors of the Acquiring Fund, subject only to the conditions and
limitations of applicable law. The Trust's Declaration of Trust provides for
indemnification of the trustees against certain liabilities and expenses, except
with respect to (i) any matter as to which any trustee has been adjudicated to
have not acted in good faith in the reasonable belief that his or her action was
in the best interest of the Acquired Fund, or (ii) any liability by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
duties. Acquired Fund shareholders may remove a trustee by a vote of two thirds
of the eligible shares. Acquiring Fund shareholders may remove a director by the
vote of a majority of eligible shares.
Neither the Acquired Fund nor the Acquiring Fund regularly holds
shareholder meetings. The By-laws of both Funds provide that a meeting of
shareholders will be held upon the written request of holders of at least 25% of
votes entitled to be cast.
The foregoing is only a summary of certain rights of the shareholders of
the Acquired Fund and of the rights these shareholders will have following the
Reorganization as holders of Class C shares of the Acquiring Fund. It is not a
complete description of the Declaration of Trust of the Trust the Articles of
Incorporation of the Acquiring Fund, the By-Laws of either entity or the
applicable Delaware or Maryland law. Shareholders desiring additional
information about those documents and provisions of law should refer to such
Declaration of Trust, Articles of Incorporation, By-Laws and provisions.
13
<PAGE>
REQUIRED VOTE
Approval of the Plan and the Reorganization will require the affirmative
vote of a majority of the shares of the Acquired Fund voted on the matter.
If an Acquired Fund shareholder abstains from voting on this matter, then
the shares held by such shareholder shall be deemed present at the meeting for
purposes of determining a quorum, but shall not be deemed to have been voted on
this matter. If a broker returns a "non-vote" proxy, indicating a lack of
authority to vote on this matter, then the shares covered by such non-vote shall
be deemed present at the meeting for purposes of determining a quorum, but shall
not be deemed to have been voted on this matter.
If the Plan is not approved by the shareholders of the Acquired Fund, or if
the Reorganization is not consummated for any other reason, the Acquired Fund
will continue to engage in business as Lord Abbett Bond-Debenture Trust, a
series of Lord Abbett Securities Trust.
The Board of Trustees of the Trust recommends that shareholders vote FOR
the approval of the proposed Agreement and Plan of Reorganization and the
Reorganization.
ITEM 2. - RATIFICATION OR REJECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Trustees of the Trust has selected Deloitte & Touche LLP as
the independent public accountants for the Trust for the fiscal year ending
October 31, 1996. The Act requires that such selection be submitted for
ratification or rejection at the next annual meeting of shareholders if such
meeting be held. Deloitte & Touche LLP (or a predecessor firm) acted as the
Trust's independent public accountants for the year ended October 31, 1995, and
for a number of years prior thereto. Based on in formation in the possession of
the Trust, and information furnished by Deloitte & Touche LLP, the firm has no
direct financial interest and no material indirect financial interest in the
Trust. A representative of Deloitte & Touche LLP is expected to attend the
annual meeting and will be provided with an oppor tunity to make a statement and
answer appropriate questions.
Ratification of the selection of Deloitte & Touche LLP by the shareholders
of the Trust requires the affirmative vote of a majority of the shares of the
Trust voted on this matter. If a shareholder abstains from voting on this
matter, then the shares held by such shareholder shall be deemed present at the
meeting for purposes of determining a quorum, but shall not be deemed to have
been voted on this matter. If a broker returns a "non-vote" proxy, indicating a
lack of authority to vote on this matter, then the shares covered by such
non-vote shall be deemed present at the meeting for purposes of determining a
quorum, but shall not be deemed to have been voted on this matter.
The Board of Trustees of the Trust recommends that shareholders vote to
ratify the selection of Deloitte & Touche LLP as the Trust's independent public
accountants for the fiscal year ending October 31, 1996.
14
<PAGE>
ADDITIONAL INFORMATION
To the knowledge of the Acquiring Fund and the Trust, as of March 22, 1996,
no person owned of record or beneficially 5% or more of the outstanding shares
of the Acquiring Fund, the Acquired Fund or the Trust. As of March 22, 1996, the
directors and officers of the Acquiring Fund, as a group, owned less than 1% of
the outstanding shares of the Acquiring Fund.
The Acquiring Fund and the Trust (of which the Acquired Fund is a series)
are subject to the informational requirements of the Securities Exchange Act of
1934 and in accordance therewith file reports, proxy statements and other
information with the Securities and Exchange Commission. Such reports, proxy
statements and other information filed by such entities can be inspected and
copied at the public reference facilities of the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C., and at the Northeast Regional Office in
New York, 7 World Trade Center, 13th Floor, New York, New York. Copies of such
material can also be obtained by mail from the Public Reference Branch, Office
of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549 at prescribed rates.
15
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this day of , 1996, by and between Lord Abbett Bond-Debenture Fund, Inc. (the
"Acquiring Fund"), a Maryland corporation, and Lord Abbett Securities Trust (the
"Trust"), a Delaware business trust, on behalf of its series Bond-Debenture
Trust (the "Acquired Fund").
WHEREAS, this Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) of the
United States Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the reorganization (the "Reorganization") will consist of the
transfer of all of the assets of the Acquired Fund in exchange for Class C
shares of capital stock of the Acquiring Fund (the "Acquiring Fund Class C
Shares" and each an "Acquiring Fund Class C Share") and the assumption by the
Acquiring Fund of all of the liabilities of the Acquired Fund and the
distribution, after the Closing Date herein referred to, of Acquiring Fund Class
C Shares to the shareholders of the Acquired Fund in termination of the Acquired
Fund, all upon the terms and conditions hereinafter set forth in this Agreement;
WHEREAS, the Trust and the Acquiring Fund are open-end, registered
investment companies of the management type;
WHEREAS, the Acquired Fund is a series of the Trust and the Acquired Fund
owns securities that generally are of the character in which the Acquiring Fund
is permitted to invest;
WHEREAS, the Acquiring Fund is authorized to issue and currently has
outstanding a single class of shares (the "Acquiring Fund Class A Shares"), and
prior to the consummation of the Reorganization, will seek to amend its Articles
of Incorporation to provide for the authorization and issuance of shares of
additional classes of capital stock, including Acquiring Fund Class C Shares,
which will share pro rata with each other class in the portfolio, income and
expenses of the Acquiring Fund, except that each class will bear the expense of
its own distribution and shareholder servicing arrangements and certain other
expenses;
WHEREAS, after the multiple class share structure is authorized by the
Acquiring Fund but before the Acquiring Fund Class C Shares are issued to the
Acquired Fund pursuant to the Reorganization, the Acquired Fund is to purchase
one Acquiring Fund Class C share and as sole shareholder approve a plan pursuant
to
<PAGE>
Section 12(b) of the Investment Company Act of 1940 (the "1940 Act") and Rule
12b- 1 thereunder (a "Rule 12b-1 Plan") applicable to the Acquiring Fund Class C
Shares;
WHEREAS, the Board of Trustees, including a majority of the Trustees who
are not "interested persons" (as defined under the 1940 Act ), of the Trust has
determined that the Reorganization is in the best interests of the Acquired
Fund's shareholders and that the interests of the existing shareholders of the
Acquired Fund will not be diluted as a result of this transaction; and
WHEREAS, the Board of Directors, including a majority of the Directors who
are not "interested persons" (as defined under the 1940 Act) of the Acquiring
Fund, has determined that the Reorganization is in the best interests of the
Acquiring Fund's shareholders and that the interests of the existing
shareholders of the Acquiring Fund will not be diluted as a result of this
transaction;
NOW THEREFORE, in consideration of the premises and of the agreements
hereinafter set forth, the parties hereto agree as follows:
1. REORGANIZATION.
1.1. Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Trust will transfer
assets of the Acquired Fund as set forth in paragraph 1.2 to the Acquiring Fund,
and the Acquiring Fund will in exchange therefor, (i) deliver to the Acquired
Fund the number of Acquiring Fund Class C Shares, including fractional Acquiring
Fund Class C Shares, determined by dividing the net value of the Acquired Fund's
assets so transferred computed in the manner and as of the time and date set
forth in para graph 2.1, by the net asset value of one Acquiring Fund Class A
Share, computed in the manner and as of the time and date set forth in paragraph
2.2; and (ii) assume all of the liabilities of the Acquired Fund. Such
transactions shall take place at the closing provided for in paragraph 3.1 (the
"Closing").
1.2. (a) The assets of the Acquired Fund to be acquired by the Acquiring
Fund shall consist of all of its property, including, without limitation, all
cash, securities and dividends or interest receivables and any deferred or
prepaid expenses shown as an asset on the books of the Acquired Fund on the
closing date provided in paragraph 3.1 (the "Closing Date").
(b) The Acquiring Fund has a list of all of the Acquired Fund's assets as
of the date of execution of this Agreement. The Acquired Fund has a statement of
the Acquiring Fund's investment objectives, policies and restrictions. The
Acquired
2
<PAGE>
Fund reserves the right to sell any of its securities but will not, without the
prior approval of the Acquiring Fund, acquire any additional securities other
than securities of the type in which the Acquiring Fund is permitted to invest.
The Acquiring Fund will, within a reasonable time prior to the Closing Date,
furnish the Acquired Fund with a list of the securities, if any, on the Acquired
Fund's list referred to in the first sentence of this paragraph which do not
conform to the Acquiring Fund's investment objectives, policies and
restrictions. In the event that the Acquired Fund holds any investments which
the Acquiring Fund may not hold, the Acquired Fund will dispose of such
securities prior to the Closing Date. In addition, if it is determined that the
portfolios of the Acquired Fund and the Acquiring Fund, when aggregated, would
contain investments exceeding certain percentage limitations imposed upon the
Acquiring Fund with respect to such investments, the Acquired Fund, if requested
by the Acquiring Fund, will dispose of and/or reinvest a sufficient amount of
such in vestments as may be necessary to avoid violating such limitations as of
the Closing Date.
1.3. As provided in paragraph 3.4, as soon after the Closing Date as is
conveniently practicable, the Acquired Fund will distribute pro rata to the
Acquired Fund's shareholders of record determined as of the close of business on
the Closing Date, the Acquiring Fund Class C Shares it receives pursuant to
paragraph 1.1. Such distribution will be accomplished by establishing Acquiring
Fund shareholder accounts in the names of each Acquired Fund shareholder,
representing the respective pro rata number of full and fractional Acquiring
Fund Class C Shares due each shareholder. All issued and outstanding shares of
the Acquired Fund will simultaneously be canceled on the books of the Acquired
Fund. The Acquiring Fund shall not issue certificates representing the Acquiring
Fund Shares in connection with such exchange.
1.4. Any transfer taxes payable upon issuance of Acquiring Fund Class C
Shares in a name other than the registered holder of the shares of the Acquired
Fund on the books of the Acquired Fund as of that time shall, as a condition of
such issuance and transfer, be paid by the person to whom such Acquiring Fund
Class C Shares are to be issued and transferred.
1.5. The Acquired Fund shall, following the Closing Date and the making of
all distributions pursuant to paragraph 1.3, be terminated by a majority of the
Trust's Trustees' executing an instrument pursuant to Section 5.4 of the
Declaration and Agreement of Trust of the Trust abolishing the Acquired Fund.
Any reporting responsibility of the Trust with respect to the Acquired Fund is
and shall remain the responsibility of the Trust up to and including the Closing
Date and following the termination of the Acquired Fund.
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2. VALUATION
2.1. The net value of the Acquired Fund's assets to be acquired by the
Acquiring Fund hereunder shall be the value of such assets, less the Acquired
Fund's liabilities assumed by the Acquiring Fund, computed as of the close of
regular trading on New York Stock Exchange, Inc. (the "NYSE") on the Closing
Date (such time and date being hereinafter called the "Valuation Date"), using
the valuation procedures set forth in the Acquiring Fund's Articles of
Incorporation.
2.2. The net asset value of one Acquiring Fund Class A Share shall be the
net asset value per share computed as of the close of regular trading on the
NYSE on the Valuation Date, using the valuation procedures set forth in the
Acquiring Fund's Articles of Incorporation.
2.3. All computations of value shall be made by the Acquiring Fund and the
Acquired Fund in accordance with the regular practice of the Acquiring Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be July 12, 1996, or such other date as the
parties may agree to in writing. All acts taking place at the Closing shall be
deemed to take place simultaneously as of the close of business on the Closing
Date unless otherwise provided. The Closing shall be held as of 5:00 p.m. at the
offices of [specify location in New Jersey], or at such other time and/or place
as the parties may agree.
3.2. In the event that on the Valuation Date (a) the NYSE or another
primary trading market for portfolio securities of the Acquiring Fund or the
Acquired Fund shall be closed to trading or trading thereon shall be restricted
or (b) trading or the reporting of trading on the NYSE or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
3.3. At the Closing, the Acquired Fund shall direct its custodian to
deliver to the custodian of the Acquiring Fund, for the Acquiring Fund's
account, all of its portfolio securities and other assets held by such custodian
for the Acquired Fund's account, duly endorsed in proper form for transfer as
appropriate, in such condition as to constitute good delivery thereof in
accordance with the custom of the
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Acquiring Fund's custodian, and shall be accompanied by all necessary federal
and state stock transfer stamps or a check for the appropriate purchase price
thereof.
3.4. The Acquired Fund shall direct its transfer agent to deliver to the
transfer agent of the Acquiring Fund on the Closing Date a list of the names and
addresses of the Acquired Fund's shareholders and the number of outstanding
shares owned by each such shareholder immediately prior to the Closing. The
Acquiring Fund shall direct its transfer agent to issue and deliver a
confirmation evidencing the Acquiring Fund Class C Shares to be credited to the
Acquired Fund's account on the Closing Date to the transfer agent of the
Acquired Fund, or provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Class C Shares have been credited to the Acquired Fund's account
on the books of the Acquiring Fund. At the Closing, each party shall deliver to
the other such bills of sale, checks, assignments, share certificates, if any,
receipts, assumption agreements or other documents as such other party or its
counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1. With respect to the Acquired Fund, the Trust represents and warrants
to the Acquiring Fund as follows:
(a) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "Commission") as an investment
company under the 1940 Act is in full force and effect.
(b) The Acquired Fund is a series of the Trust. The Trust is duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the power to own all of its properties and assets
and to carry out this Agreement.
(c) The current prospectus and statement of additional information of
the Trust conform (and any prospectus or statement of additional
information of the Trust issued prior to the Closing Date will conform) in
all material respects to the applicable requirements of the Securities Act
of 1933 Act, as amended (the "1933 Act"), and the 1940 Act and the rules
and regulations of the Commission thereunder and do not (and will not)
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
(and will be) made, not materially misleading.
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(d) The Trust is not, and the execution, delivery and performance of
this Agreement will not result in, a material violation of its Declaration
and Agreement of Trust or By-laws or of any agreement, instrument, contract
or other undertaking to which the Trust is a party or by which it is bound.
(e) The Trust has no material contracts or other commitments which
will be terminated with liability to the Trust on, prior to or after the
Closing Date.
(f) Except as otherwise disclosed in writing to and accepted by the
Acquiring Fund, no litigation or administrative proceeding or investigation
before any court or governmental body is presently pending or to its
knowledge threatened against the Trust or any of the Acquired Fund's
properties or assets, which if adversely determined would materially and
adversely affect the financial condition of the Acquired Fund or the
conduct of the Acquired Fund's business. The Trust knows of no facts which
might form the basis of the institution of such a proceeding and is not
party to or subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely affects the
business of the Acquired Fund or the ability of the Trust to consummate the
transactions contemplated herein.
(g) True and correct copies of the Acquired Fund's (i) Statement of
Net Assets as at October 31, 1995 and (ii) Statements of Operations and
Changes in Net Assets for the 12-month period then ended, including the
accompanying notes, have been furnished to the Acquiring Fund. Such
Statement of Net Assets and such Statements of Operations and Changes in
Net Assets (and the accompanying notes) have been audited by Deloitte &
Touche LLP, independent certified public accountants. Such statements have
been prepared in accordance with generally accepted accounting principles
consistently applied, and such statements fairly reflect the financial
condition and the operations and changes in net assets of the Acquired Fund
as of such date and for such period, respectively. There are no known
contingent liabilities of the Acquired Fund as of such date required to be
reflected or disclosed in such Statement of Net Assets or notes in
accordance with generally accepted accounting principles that are not so
reflected or disclosed.
(h) Since October 31, 1995, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business,
or any incurrence by the Acquired Fund of indebtedness maturing more than
one
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year from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquiring Fund.
(i) The Trust will file the final federal and other tax returns of the
Acquired Fund for the period ending on the Closing Date in accordance with
the Code. At the Closing Date, all federal and other tax returns and
reports of the Acquired Fund required by law to have been filed prior to
the Closing Date shall have been filed, and all federal and other taxes
shown as due on such returns shall have been paid, or provision shall have
been made for the payment thereof, and to the best of the Trust's
knowledge, no such return is currently under audit and no assessment has
been asserted with respect to such returns.
(j) For the most recent fiscal year of its operation, the Acquired
Fund has met the requirements of Subchapter M of the Code for qualification
and treatment as a regulated investment company.
(k) All issued and outstanding shares of the Acquired Fund are, and at
the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable. All of the issued and outstanding shares of the
Acquired Fund will, at the time of Closing, be held of record by the
persons and in the amounts set forth in the records of the transfer agent
as provided in paragraph 3.4. The Acquired Fund does not have outstanding
any options, warrants or other rights to subscribe for or purchase any
shares of the Acquired Fund, nor is there outstanding any security
convertible into any shares of the Acquired Fund.
(l) At the Closing Date, the Acquired Fund will have good and
marketable title to its assets to be transferred to the Acquiring Fund
pursuant to paragraph 1.1 and full right, power and authority to sell,
assign, transfer and deliver such assets hereunder and, upon delivery and
payment for such assets, the Acquiring Fund will acquire good and
marketable title thereto, subject to no restrictions on the full transfer
thereof, including such restrictions as might arise under the 1933 Act,
other than as disclosed to the Acquiring Fund prior to the date hereof.
(m) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of Trust's Trustees,
and subject to the due approval of the Acquired Fund's shareholders, this
Agreement, assuming due authorization, execution and delivery by the
Acquiring Fund, constitutes a valid and binding obligation of the Trust on
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behalf of the Acquired Fund, enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles. The Trust's Board of Trustees has called a
meeting of the Trust's shareholders at which the shareholders of the
Acquired Fund are to consider and act upon this Agreement.
(n) The information furnished and to be furnished by the Trust on
behalf of the Acquired Fund for use in registration statements, proxy
materials and other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations thereunder applicable thereto.
(o) The combined prospectus and proxy statement (the "N-14 prospectus
and proxy statement") and the related statement of additional information
included in the Registration Statement on Form N-14 of the Acquiring Fund
(the "N-14 Registration Statement") did not on the effective date of the
N-14 Registration Statement contain any untrue statement of a material fact
relating to the Acquired Fund or the meeting of the Trust shareholders
referred to therein or omit to state a material fact required to be stated
therein or necessary to make the statements therein relating to the
Acquired Fund or such special meeting, in light of the circumstances under
which such statements were made, not materially misleading.
(p) The Acquiring Fund Class C Shares to be issued to the Acquired
Fund hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this
Agreement.
4.2. The Acquiring Fund represents and warrants to the Acquired Fund as
follows:
(a) The Acquiring Fund is a registered investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act is in full force and
effect.
(b) The Acquiring Fund is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland and
has the power to own all of its properties and assets and to carry out this
Agreement.
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(c) The current prospectus and statement of additional information of
the Acquiring Fund conform (and any prospectus or statement of additional
information of the Acquiring Fund issued prior to the Closing Date will
conform) in all material respects to the applicable requirements of the
1933 Act and the 1940 Act and the rules and regulations of the Commission
thereunder and do not (and will not) include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were (or will be) made, not materially
misleading.
(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result in, a material violation of
its Articles of Incorporation or By-laws or of any agreement, instrument,
contract or other undertaking to which the Acquiring Fund is a party or by
which it is bound.
(e) The Acquiring Fund has no material contracts or other commitments
which will be terminated with liability to the Acquiring Fund on, prior to
or after the Closing Date.
(f) Except as otherwise disclosed in writing to and accepted by the
Acquired Fund, no litigation or administrative proceeding or investigation
before any court or governmental body is presently pending or to its
knowledge threatened against the Acquiring Fund or any of the Acquiring
Fund's properties or assets, which, if adversely determined, would
materially and adversely affect its financial condition or the conduct of
its business. The Acquiring Fund knows of no facts which might form the
basis of the institution of such a proceeding and is not party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business or
its ability to consummate the transactions contemplated herein.
(g) True and correct copies of the Acquiring Fund's (i) Statement of
Net Assets as at December 31, 1995, and (ii) Statements of Operation and
Changes in Net Assets for the 12-month period then ended, including the
accompanying notes, have been furnished to the Trust. Such Statement of Net
Assets and such Statements of Operations and Changes in Net Assets (and the
accompanying notes) have been audited by Deloitte & Touche LLP, independent
certified public accountants. Such statements have been prepared in
accordance with generally accepted accounting principles consistently
applied, and such statements fairly reflect the financial condition and the
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operations and changes in net assets of the Acquiring Fund as of such date
and for such period, respectively. There are no known contingent
liabilities of the Acquiring Fund as of such date required to be reflected
or disclosed in such Statements of Net Assets or notes in accordance with
generally accepted accounting principles that are not so reflected or
disclosed.
(h) Since December 31, 1995, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business,
or any incurrence by the Acquiring Fund of indebtedness maturing more than
one year from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquired Fund.
(i) At the Closing Date, all federal and other tax returns and reports
of the Acquiring Fund required by law to have been filed prior to the
Closing Date shall have been filed, and all federal and other taxes shown
as due on such returns and reports shall have been paid, or provision shall
have been made for the payment thereof, and to the best of the Acquiring
Fund's knowledge, no such return is currently under audit and no assessment
has been asserted with respect to such returns.
(j) For the most recent fiscal year of its operation, the Acquiring
Fund has met the requirements of Subchapter M of the Code for qualification
and treatment as a regulated investment company and the Acquiring Fund
intends to do so in the future.
(k) All issued and outstanding shares of the Acquiring Fund are, and
at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable, with no personal liability attaching to the
ownership thereof. The Acquiring Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any shares
of the Acquiring Fund, nor is there outstanding any security convertible
into shares of the Acquiring Fund.
(l) At the Closing Date, the Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets.
(m) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of the Acquiring Fund's
Board of Directors, and assuming due authorization, execution and delivery
by the Acquired Fund, this Agreement constitutes a valid and binding
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<PAGE>
obligation of the Acquiring Fund, enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles.
(n) The N-14 Registration Statement (except insofar as it relates to
the Acquired Fund or the special meeting of its shareholders referred to
therein) did not on the effective date of the N-14 Registration Statement
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which such statements were
made, not materially misleading.
(o) The Acquiring Fund Class C Shares to be issued and delivered to
the Acquired Fund pursuant to the terms of this Agreement have been duly
authorized by the Board of Directors of the Acquiring Fund, and, when
issued and delivered at the Closing in accordance with this Agreement, will
be duly and validly issued Acquiring Fund Class C Shares and will be fully
paid and non-assessable with no personal liability attaching to the
ownership thereof.
(p) The Board of Directors of the Acquiring Fund has duly adopted (a)
articles of amendment to the Articles of Incorporation of the Acquiring
Fund (i) authorizing the Board of Directors to create multiple classes
within series (which amendment has been duly approved by the shareholders
of the Acquiring Fund) and (ii) designating the initial class of shares,
both outstanding unissued shares, as Class A Shares and (b) articles
supplementary creating Acquiring Fund Class C Shares. Such articles have
been duly filed with the State Department of Assessments and Taxation of
Maryland and copies of same have been furnished to the Trust.
5. COVENANTS
5.1. The Acquiring Fund and the Acquired Fund each will operate its
business in the ordinary course between the date hereof and the Closing Date. It
is understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions and any other dividends and
distributions deemed advisable.
5.2. At or after the Closing, the Trust will deliver or otherwise make
available to the Acquiring Fund a statement of the Acquired Fund's assets and
liabilities, together with a list of the Acquired Fund's portfolio securities
showing the
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tax costs of such securities to it and the holding periods of such securities,
as of the Closing Date.
5.3. The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund's shares.
5.4. Subject to the provisions of this Agreement, the Acquired Fund and the
Acquiring Fund each will take, or cause to be taken, all action, and do or cause
to be done all things, reasonably necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement.
5.5. Prior to the Closing Date, the Board of Trustees of the Trust will
declare such dividends and distributions, payable no later than [90] days after
the Closing Date, to shareholders of record of the Acquired Fund as of the
Closing Date, which, together with all such previous dividends and
distributions, shall have the effect of distributing to the shareholders of the
Acquired Fund all of the investment company taxable income and exempt-interest
income of the Acquired Fund for all taxable years ending on or prior to the
Closing Date. The dividends and distributions declared by the Acquired Fund
shall also include all of the Acquired Fund's net capital gain realized in all
taxable years ending on or prior to the Closing Date (after reduction for any
capital loss carry forward). Such dividends and distributions declared prior to
the Closing Date shall be paid by the Acquiring Fund no later than [90] days
after the Closing Date.
5.6. As promptly as practicable, but in any case within sixty days after
the Closing Date, the Acquired Fund shall furnish the Acquiring Fund, in such
form as is reasonably satisfactory to the Acquiring Fund, a statement of the
earnings and profits of the Acquired Fund for federal income tax purposes which
will be carried over to the Acquiring Fund as a result of Section 381 of the
Code.
5.7. The Acquired Fund will provide the Acquiring Fund with any additional
information reasonably necessary for any revision of the N-14 Prospectus and
Proxy Statement referred to in paragraph 4.1(o), all to be included in any
amendment to the N-14 Registration Statement, in compliance with the 1933 Act,
the Securities Exchange Act of 1934 (the "1934 Act") and the 1940 Act in
connection with the meeting of the Acquired Fund's shareholders to consider
approval of this Agreement and the Reorganization.
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6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST
The obligations of the Trust, on behalf of the Acquired Fund, to consummate
the transactions provided for herein shall be subject, at its election, to the
performance by the Acquiring Fund in all material respects of all of the
obligations to be performed by it hereunder on or before the Closing Date and,
in addition thereto, the following further conditions:
6.1. All representations and warranties of the Acquiring Fund contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date.
6.2. The Acquiring Fund shall have delivered to the Acquired Fund a
certificate executed in its name by its Chairman, President or a Vice President
and its Treasurer or an Assistant Treasurer, in form reasonably satisfactory to
the Acquired Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquiring Fund made in this Agreement are
true and correct at and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Trust in all material respects of all the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the following
further conditions:
7.1. All representations and warranties of the Trust contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date.
7.2. The Trust shall have delivered to the Acquiring Fund on the Closing
Date a certificate executed in its name by its Chairman, President or a Vice
President and its Treasurer or an Assistant Treasurer, in form and substance
satisfactory to the Acquiring Fund and dated as of the Closing Date, to the
effect that the representations and warranties of the Trust made in this
Agreement are true and
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correct at and as of the Closing Date, except as they may be affected by the
trans actions contemplated by this Agreement.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST AND THE ACQUIRING
FUND
If any of the conditions set forth below do not exist on the Closing Date
with respect to the Acquiring Fund or the Acquired Fund, either party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of the Trust's Declaration
and Agreement of Trust and By-laws. Notwithstanding anything herein to the
contrary, neither the Acquiring Fund nor the Acquired Fund may waive the
conditions set forth in this paragraph 8.1.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3. All consents of other parties and all other consents, orders, rulings
and permits of federal, state and local regulatory authorities (including those
of the Commission, the Internal Revenue Service and state Blue Sky and
securities authorities) deemed necessary by the Acquiring Fund or the Acquired
Fund to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order, ruling or permit would not involve a risk of a material
adverse effect on the assets or properties of the Acquiring Fund or the Acquired
Fund.
8.4. The N-14 Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5. The parties shall have received a favorable opinion of Debevoise &
Plimpton, addressed to the Acquiring Fund and the Trust and satisfactory to the
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Secretary of each such party, substantially to the effect that for federal
income tax purposes:
(a) the acquisition by the Acquiring Fund of all of the assets of the
Acquired Fund solely in exchange for the issuance of Acquiring Fund Class C
Shares to the Acquired Fund and the assumption of all of the Acquired Fund
liabilities by the Acquiring Fund, followed by the distribution by the
Acquired Fund, in complete liquidation, of the Acquiring Fund Class C
Shares to the Acquired Fund shareholders in exchange for their Acquired
Fund shares, will be treated as a "reorganization" within the meaning of
Section 368(a) of the Code, and the Acquiring Fund and the Acquired Fund
will each be a "party to a reorganization" within the meaning of Section
368(b) of the Code;
(b) no gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund in exchange for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of liabilities of the
Acquired Fund;
(c) no gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of
liabilities of the Acquired Fund or upon the distribution of the Acquiring
Fund Shares to the Acquired Fund's shareholders;
(d) no gain or loss will be recognized by shareholders of the Acquired
Fund upon the exchange of their Acquired Fund shares for the Acquiring Fund
Shares;
(e) the aggregate tax basis for the Acquiring Fund Shares received by
each of the Acquired Fund's shareholders pursuant to the Reorganization
will be the same as the aggregate tax basis of the Acquired Fund shares
held by such shareholder immediately prior to the Reorganization, and the
holding period of the Acquiring Fund Shares to be received by each Acquired
Fund shareholder will include the period during which the Acquired Fund
shares exchanged therefor were held by such shareholder (provided that the
Acquired Fund shares were held as capital assets on the date of the
Reorganization); and
(f) the tax basis of the Acquired Fund's assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the
Acquired Fund immediately prior to the Reorganization, and the holding
period of the assets of the Acquired Fund in the hands of the Acquiring
Fund
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will include the period during which those assets were held by the Acquired
Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring Fund
nor the Trust may waive the conditions set forth in this paragraph 8.5.
8.6. The Acquiring Fund shall have duly adopted a Rule 12b-1 Plan for the
Acquiring Fund Class C Shares acceptable to the Trust.
9. BROKERAGE FEES AND EXPENSES
9.1. The Acquiring Fund represents and warrants to the Acquired Fund, and
the Trust represents and warrants to the Acquiring Fund, that there are no
brokers or finders entitled to receive any payments in connection with the
transactions provided for herein.
9.2. Except as may be otherwise provided herein, the Acquiring Fund and the
Acquired Fund each shall pay, or provide for the payment of, the expenses
incurred by it in connection with entering into and carrying out the provisions
of this Agreement.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. The parties hereto agree that no party has made any representation,
warranty or covenant not set forth herein and that this Agreement constitutes
the entire agreement between the parties.
10.2. None of the representations and warranties included or provided for
herein shall survive the consummation of the transactions contemplated hereby.
11. TERMINATION
11.1. This Agreement may be terminated at any time prior to the Closing
Date: (1) by the mutual agreement of the Trust and the Acquiring Fund; (2) by
the Trust in the event that the Acquiring Fund shall, or by the Acquiring Fund
in the event that the Trust shall, materially breach any representation or
warranty contained herein or any agreement contained herein and to be performed
at or prior to the Closing Date; or (3) by either party if a condition herein
expressed to be precedent to the obligations of the terminating party has not
been met and it reasonably appears that it will not or cannot be met.
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11.2. In the event of any such termination, there shall be no liability for
damages on the part of either the Trust, the Acquired Fund or the Acquiring Fund
or their respective Trustees, Directors or officers to the other party, but the
Acquiring Fund and the Acquired Fund shall each bear, or provide for the payment
of, the expenses incurred by it incidental to the preparation and carrying out
of this Agreement as provided in paragraph 9.2.
12. AMENDMENTS; WAIVERS
12.1. This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
the Trust and the Acquiring Fund; provided, however, that following the approval
of the Acquired Fund shareholders referred to in paragraph 8.1, no such
amendment may have the effect of changing the provisions for determining the
number of the Acquiring Fund Class C Shares to be issued to the Acquired Fund's
shareholders under this Agreement to the detriment of such shareholders without
their further approval.
12.2. At or at any time prior to the Closing either party hereto may by
written instrument signed by it (i) waive any inaccuracies in the
representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions made for its benefit
contained herein.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by personal
delivery addressed to Lord Abbett Securities Trust on behalf of its series Bond-
Debenture Trust, 767 Fifth Avenue, New York, New York, 10153, Attention: Office
of the Secretary; or to Lord Abbett Bond-Debenture Fund, Inc., 767 Fifth Avenue,
New York, New York, 10153, Attention: Office of the Secretary.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1. The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
17
<PAGE>
14.3. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
14.4. (a) This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm, corporation or other entity, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
18
<PAGE>
(b) The Acquiring Fund is hereby expressly put on notice of the limitation
of liability as set forth in Article IV of the Declaration and Agreement of
Trust of the Trust and agrees that the obligations assumed by the Trust pursuant
to this Agreement shall be limited in any case to the Acquired Fund and its
assets and the Acquiring Fund shall not seek satisfaction of any such obligation
from the shareholders of the Trust, the trustees, officers, employees or agents
of the Trust or any of them or from any other assets of the Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its Chairman of the Board, President or Vice President and
attested by its Secretary or Assistant Secretary.
Attest: LORD ABBETT SECURITIES TRUST
on behalf of Lord Abbett Bond-Debenture Trust
By: _______________________________
Name: _____________ Name:
Title: Secretary Title:
Attest: LORD ABBETT BOND-DEBENTURE
FUND, INC.
By: _______________________________
Name: _____________ Name:
Title: Secretary Title:
19
<PAGE>
EXHIBIT B
Comparison of Certain Investment Policies and Restrictions
Comparison of the fundamental and certain non-fundamental investment
policies and restrictions of Lord Abbett Bond-Debenture Trust (the "Acquired
Fund"), a series of Lord Abbett Securities Trust, and Lord Abbett Bond-Debenture
Fund, Inc. (the "Acquiring Fund") and of the Acquiring Fund as proposed to be
revised.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Policy/Restriction of the Policy/Restriction of the Proposed Policy/Restriction of
Acquired Fund Acquiring Fund the Acquiring Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT SALES/MARGIN.
Non-fundamental Fundamental Non-fundamental
Subject to certain exceptions, the Subject to certain exceptions, the The Fund may not make short sales of
Fund may not sell short or buy on Fund may not sell short or buy on securities or maintain a short position
margin. margin. except to the extent permitted by
applicable law.
Fundamental
The Fund may purchase securities on
margin to the extent permitted by
applicable law.
- -----------------------------------------------------------------------------------------------------------------------------------
BORROWING.
Fundamental Fundamental Fundamental
The Fund may not borrow in excess The Fund may not borrow in excess The Fund may not borrow money,
of 5% of its gross assets taken at cost of 5% of its gross assets taken at cost except that (i) the Fund may borrow
or market value, whichever is lower or market value, whichever is lower from banks (as defined in the 1940
at the time of borrowing and then at the time of borrowing and then Act) in amounts up to 33 1/3% of its
only as a temporary measure for only as a temporary measure for total assets (including the amount bor
extraordinary or emergency purposes. emergency purposes. rowed), (ii) the Fund may borrow up
to an additional 5% of its total assets
for temporary purposes, and (iii) the
Fund may obtain such short-term
credit as may be necessary for the
clearance of purchases and sales of
portfolio securities.
Non-fundamental
The Fund may not borrow in excess
of 5% of its gross assets either at cost
or market value, whichever is lower
at the time of borrowing, and then
only as a temporary measure for
extraordinary or emergency purposes.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Policy/Restriction of the Policy/Restriction of the Proposed Policy/Restriction of
Acquired Fund Acquiring Fund the Acquiring Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
UNDERWRITING. Fundamental
Fundamental Fundamental The Fund may not engage in the
The Fund may not engage in the The Fund may not engage in the underwriting of securities, except,
underwriting of securities, except underwriting of securities except, to pursuant to a merger or acquisition or
pursuant to a merger or acquisition or the extent that, in connection with the to the extent that, in connection with
to the extent that, in connection with disposition of its portfolio securities,the disposition of its portfolio secur
the disposition of its portfolio secu- it may be deemed to be an under ities, it may be deemed to be an
rities, it may be deemed to be an writer under federal securities laws. underwriter under federal securities
underwriter under federal securities laws.
laws.
- -----------------------------------------------------------------------------------------------------------------------------------
LENDING.
Fundamental Fundamental Fundamental
The Fund may not lend money or The Fund may not make loans, except The Fund may not make loans to
securities, except that it may lend for (a) time or demand deposits with other persons, except that the acqui
portfolio securities subject to certain banks, (b) purchasing commercial sition of bonds, debentures or other
limitations. The Acquired Fund also paper or publicly-offered debt secu corporate debt securities and invest
may enter into certain repurchase rities at original issue or otherwise, ment in government obligations, com
agreements. (c) certain short-term repurchase mercial paper, pass-through instruments,
agreements and (d) loans of our certificates of deposit, bankers
portfolio securities to registered acceptances, repurchase agreements
broker-dealers, subject to certain or any similar instruments shall not be
exceptions. 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.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
Policy/Restriction of the Policy/Restriction of the Proposed Policy/Restriction of
Acquired Fund Acquiring Fund the Acquiring Fund
- -----------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE/COMMODITIES.
<S> <C> <C>
Fundamental Fundamental Fundamental
The Fund may not deal in real estate, The Fund may not deal in oil, gas or The Fund may not buy or sell real
commodities or commodity contracts, mineral leases, real estate, com estate (except that the Fund may in
excluding the securities of companies modities or commodity contracts vest in securities directly or indirectly
which deal in or hold real estate or (except that the Fund may invest in secured by real estate or interests
commodities. securities issued by companies which therein or issued by companies which
invest in real estate or interests invest in real estate or interests
therein). 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).
Non-fundamental
The Fund may not 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 development
activities.
- -----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFICATION.
Fundamental Fundamental Fundamental
With respect to 75% of its gross With respect to 75% of its gross With respect to 75% of its gross
assets, the Fund may not buy secu assets, the Fund may not buy secu assets, the Fund may not buy securi
rities of one issuer representing (i) rities of one issuer representing more ties of one issuer representing more
more than 5% of the Fund's gross than (i) 5% of the Fund's gross than (i) 5% of its gross assets, except
assets, except securities issued or assets, except securities issued or securities issued or guaranteed by the
guaranteed by the U.S. Government, guaranteed by the U.S. Government, U.S. Government, its agencies or in
its agencies or instrumentalities, or its agencies or instrumentalities, or strumentalities, or (ii) 10% of the
(ii) 10% of the voting securities of (ii) 10% of the voting securities of voting securities of such issuer.
such issuer. such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT IN A SINGLE
INDUSTRY.
Fundamental Fundamental Fundamental
The Fund may not concentrate its The Fund may not invest more than The Fund may not invest more than
investments in any single industry 25% of its assets, taken at market 25% of its assets, taken at market
excluding U.S. Government value, in the securities of issuers in value, in the securities of issues in
securities. any particular industry. any particular industry (excluding
securities of the U.S. government, its
agencies and instrumentalities).
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Policy/Restriction of the Policy/Restriction of the Proposed Policy/Restriction of
Acquired Fund Acquiring Fund the Acquiring Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RESTRICTED/ILLIQUID SECU-
RITIES.
Non-fundamental Fundamental Non-fundamental
The Fund may not invest more than The Fund may not invest more than The Fund may not invest, knowingly,
15% of its total assets in restricted or 15% of its total assets in restricted or more than 15% of its net assets (at
illiquid securities, except, subject to illiquid securities. the time of investment) in illiquid
state law, for securities qualifying for securities, except for securities
resale under Rule 144A of the qualifying for resale under Rule 144A
Securities Act of 1933, deemed to be of the Securities Act of 1933, deemed
liquid by the Board of Trustees. to be liquid by the Board of
Directors.
- -----------------------------------------------------------------------------------------------------------------------------------
MORTGAGING AND PLEDGING
OF ASSETS.
Non-fundamental Fundamental Fundamental
The Fund may not, with certain The Fund may not pledge, mortgage The Fund may not pledge its assets
exceptions, pledge, mortgage or or hypothecate its assets. (other than to secure borrowings, or
hypothecate its assets. to the extent permitted by the Fund's
investment policies as permitted by
applicable law).
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
OF OTHER INVESTMENT COM
PANIES.
Non-fundamental Fundamental Non-fundamental
The Fund may not, with certain The Fund may not buy securities The Fund may not invest in the
exceptions, invest in the securities of issued by any other open-end invest securities of other investment
other investment companies. ment company (except pursuant to a companies, except as permitted by
plan of merger, consolidation or applicable law.
acquisition of assets), although it may
invest up to 5% of its gross assets in
such companies if purchased in the
open market at customary commission
rates.
- -----------------------------------------------------------------------------------------------------------------------------------
OPTIONS.
Non-fundamental Fundamental Non-fundamental
The Fund may not buy or sell puts or The Fund may not buy or sell puts or The Fund may not write, purchase or
calls, although the Fund may buy, calls, although the Fund may buy, sell puts, calls, straddles, spreads or
hold or sell warrants. hold or sell warrants acquired with combinations thereof, except to the
debt securities. extent permitted in the Fund's
prospectus and statement of additional
information, as they may be amended
from time to time.
Although it has no current intention to
do so, the Fund may invest in
financial futures and options on
financial futures.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
4
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Policy/Restriction of the Policy/Restriction of the Proposed Policy/Restriction of
Acquired Fund Acquiring Fund the Acquiring Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS IN SECURITIES
OF ISSUERS IN OPERATION
FOR LESS THAN THREE YEARS.
Non-fundamental Fundamental Non-fundamental
The Fund may not invest in securities The Fund may not invest more than The Fund may not invest in securities
of issuers which, with their pre- 5% of gross assets in securities of of issuers which, with their
decessors, have a record of less than issuers which have a record of less predecessors, have a record of less
three years continuous operations, than three years continuous than three years continuous
except through subscription or other operations, including predecessor operations, except if more than 5% of
rights limited to 5% of net assets. companies. 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).
- -----------------------------------------------------------------------------------------------------------------------------------
OWNERSHIP
OF PORTFOLIO
SECURITIES BY OFFICERS AND
DIRECTORS.
Non-fundamental Fundamental Non-fundamental
The Fund may not hold securities of The Fund may not hold securities of The Fund may not hold securities of
any issuer if more than 1/2 of 1% of any issuer, any of whose officers, any issuer if more than 1/2 of 1% of
the securities of such issuer are directors or security holders is an the securities of such issuer are
owned beneficially by one or more officer, director or partner of the owned beneficially by one or more
officer or trustee or by one or more Funds investment adviser or an officers or Directors or by one or
partners of the underwriter of officer or director of the Fund, if more members or partners of the
investment advisor if together they more than 1/2 of 1% of the securities underwriter or investment advisor if
own more than 5% of the securities of of such issuer are owned beneficially together they own more than 5% of
such issuer. such person or if together they own the securities of such issuer.
beneficially more than 5% of the
securities of such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSACTIONS WITH CER-
TAIN PERSONS.
Fundamental Non-fundamental
None stated (but certain restrictions The Fund, subject to certain excep The Fund may not buy from or sell to
may exist under applicable law). tions, may not engage in securities any of its officers, directors,
transactions with its officers, employees, or its investment adviser
directors or employees, underwriter or any of its officers, directors,
or investment adviser or with oficers, partners or employees any securities
directors or firms (acting as prin- other than shares of the Fund's
cipals) with which any of the fore- common stock.
going are associated.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Policy/Restriction of the Policy/Restriction of the Proposed Policy/Restriction of
Acquired Fund Acquiring Fund the Acquiring Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SENIOR SECURITIES.
Fundamental
Fundamental None. The Fund may not issue senior
securities to the extent such issuance
The fund may not issue senior would violate applicable law.
securities.
- -----------------------------------------------------------------------------------------------------------------------------------
DEFAULTED SECURITIES.
None. Fundamental Non-fundamental
The Fund may not invest more than The Fund may not invest more than
10% of the market value of its gross 10% of the market value of its gross
assets at the time of investment in assets at the time of investment in
debt securities which are in default as debt securities which are in default as
to interest or principal. to interest or principal.
- -----------------------------------------------------------------------------------------------------------------------------------
PURCHASE OF WARRANTS.
Non-fundamental Non-fundamental Non-fundamental
The Fund may not invest more than Pursuant to state law, the Fund will The Fund may not invest in warrants
2% of its net assets in rights or not invest more than 5% of its assets if, at the time of the acquisition, its
warrants not listed on the New York in warrants and not more than 2% of investment in warrants, valued at the
Stock Exchange or American Stock such value in warrants not listed on lower of cost or market, would
Exchange. the New York or American Stock exceed 5% of the Fund's total assets
Exchanges, except when they form a (included within such limitation, but
unit with other securities. As a not to exceed 2% of the Fund's total
matter of policy the Fund will not assets, are warrants which are not
invest more than 5% of its assets in listed on the New York or American
rights. Stock Exchange or a major foreign
exchange).
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 24, 1996
Acquisition of the Assets of
Lord Abbett Bond-Debenture Trust, a series of
Lord Abbett Securities Trust
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
by and in exchange for Class C Shares of
Lord Abbett Bond-Debenture Fund, Inc.
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
This Statement of Additional Information, relating specifically to the
proposed transfer of the assets of Lord Abbett Bond-Debenture Trust (the
"Acquired Fund"), a series of Lord Abbett Securities Trust (the "Trust"), to
Lord Abbett Bond-Debenture Fund, Inc. (the "Acquiring Fund") in exchange for
Class C shares of the Acquiring Fund and the assumption by the Acquiring Fund of
the liabilities of the Acquired Fund, consists of this page and the following
described documents, each of which accompanies this Statement of Additional
Information and is incorporated herein by reference:
1. Statement of Additional Information of the Acquiring Fund dated May 1,
1995.
2. Statement of Additional Information of the Trust dated March 1, 1996,
insofar as it relates to the Acquired Fund.
3. The financial statements of the Acquiring Fund for the fiscal year ended
December 31, 1995, and the report thereon of Deloitte & Touche LLP, independent
public accountants, contained in the 1995 Annual Report of the Acquiring Fund.
4. The financial statements of the Acquired Fund for the fiscal year ended
October 31, 1995, and the report thereon of Deloitte & Touche LLP, independent
public accountants, contained in the 1995 Annual Report of the Acquired Fund.
The financial statements referred to above are incorporated herein in
reliance upon the authority of Deloitte & Touche LLP as experts in auditing and
accounting. This Statement of Additional Information is not a prospectus. A
Proxy Statement and Prospectus dated the date hereof relating to the
above-referenced matter may be obtained without charge by writing the Acquiring
Fund at the address set forth above or by calling 1-800-874-3733. This Statement
of Additional Information should be read in conjunction with such Proxy
Statement and Prospectus.
B-1
<PAGE>
PART C
Item 16. Exhibits
2. Opinion of Debevoise & Plimpton as to the legality of securities
being issued and Consent; filed herewith.
17. Prospectus and Statement of Additional Information of Lord Abbett
Securities Trust, incorporated herein by reference to Post
Effective Amendment No. 10 to Registration Statement on Form
N-1A of Lord Abbett Securities Trust (File Nos. 33-58846 and 811-
7538) filed on or about February 29, 1996.
C-1
<PAGE>
SIGNATURES
*Post-effective amendment No. 1 to this Registration Statement has been
signed on behalf of the Registrant in the City of New York and State of New York
on the 24 day of April 1996, who certifies that this Post-Effective Amendment
No. 1 meets all the requirements for effectiveness under paragraph (b) of Rule
485 under the Securities Act of 1933, as amended.
LORD ABBETT BOND-DEBENTURE FUND, INC.
By: /s/Ronald P. Lynch,
-----------------------------
Ronald P. Lynch, Chairman
of the Board
*Post-Effective Amendment No. 1 to this Registration Statement has
been signed by the following persons in the capacities indicated and on the
dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Ronald P. Lynch Chairman of the Board
- ------------------------------- and Director 4/24/96
Ronald P. Lynch
/s/ Robert S. Dow President and Director
- ------------------------------- 4/24/96
Robert S. Dow
/s/ John J. Gargana, Jr. Vice President and
- ------------------------------- Chief Financial Officer 4/24/96
John J. Gargana, Jr.
/s/ E. Thayer Bigelow Director
- ------------------------------- 4/24/96
E. Thayer Bigelow
/s/ Director
- ------------------------------- ----------
Stewart S. Dixon
/s/ Director
- ------------------------------- ----------
John C. Jansing
/s/ C. Alan MacDonald Director
- ------------------------------- 4/24/96
C. Alan MacDonald
/s/ Director
- ------------------------------- ----------
Hansel B. Millican, Jr.
/s/ Thomas J. Neff Director
- ------------------------------- 4/24/96
Thomas J. Neff
C-2
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as a part of this Registration Statement
pursuant to General Instruction G of Form N-14.
Exhibit Page
Number Description Number
- ------ ----------- ------
(11) Opinion of Debevoise & Plimpton as to legality
of securities being issued and Consent
C-3
Exhibit 11
[Debevoise & Plimpton Letterhead]
April 24, 1996
Lord Abbett Bond-Debenture Fund, Inc.
The General Motors Building
767 Fifth Avenue
New York, New York 10153
Lord Abbett Bond-Debenture Fund, Inc.
Registration Statement on Form N-14
------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Lord Abbett Bond Debenture Fund, Inc. (the
"Registrant"), a Maryland corporation, in connection with the preparation and
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, of a Registration Statement on Form N-14 (File No. 811-2145)
and Post-Effective Amendment No. 1 thereto (as so amended, the "Registration
Statement"), relating to the issuance of shares of the capital stock of the
Registrant.
Such shares are to be established and designated as the Class C shares
(the "Class C shares"). The Class C shares are to be issued to Lord Abbett
Bond-Debenture Trust (the "Acquired Trust"), a series of Lord Abbett Securities
Trust (the "Securities Trust"), a Delaware business trust,
<PAGE>
Lord Abbett Bond-Debenture Fund, Inc.
Page 2
pursuant to an Agreement and Plan of Reorganization (the "Acquired Trust Plan")
between the Securities Trust, on behalf of the Acquired Trust, and the
Registrant substantially in the form of Exhibit A included in Part A of the
Registration Statement. Such issuance of the Class C shares is to be made in
connection with the acquisition by the Registrant of the assets of, and the
assumption by the Registrant of the liabilities of, the Acquired Trust.
In so acting, we have examined and relied upon the originals, or
copies certified or otherwise identified to our satisfaction, of such documents,
records, certificates and other instruments and have made such other
investigations as in our judgment are necessary or appropriate to enable us to
render the opinion expressed below. We have not, however, undertaken any
independent investigation of any factual matter set forth in any of the
foregoing.
Based on the foregoing, we are of the following opinion:
Assuming that the Acquired Trust and the Registrant duly execute and
deliver the Acquired Trust Plan, that the Acquired Trust Plan and the
reorganization provided for thereby are duly approved by the shareholders of the
Acquired Trust, that the transactions contemplated by the Acquired Trust Plan
are duly consummated and that the charter documents substantially in the forms
of Exhibits 1(b), 1(c) and 1(d) to the Registration Statement are duly approved
and filed with the State Department of Assessments and Taxation of Maryland, the
Class C shares issued pursuant to the Acquired Trust Plan will be legally
issued, fully paid and non-assessable.
We understand that the authorized shares of capital stock of each
series and of each class of each series of the Registrant are sufficient for the
issuance of the Class C shares that would be issued pursuant to the Acquired
Trust Plan if the closing under such Plan took place today. The foregoing
opinion assumes that if, pending such closing, additional authorized shares are
required, the Registrant will amend its Articles of Incorporation to provide for
such authorized shares.
This opinion is limited solely to the federal law of the United States
and the Maryland General Corporation
<PAGE>
Lord Abbett Bond-Debenture Fund, Inc.
Page 3
Law as in effect on the date hereof and the relevant facts that exist as of the
date hereof. Without limiting the generality of the foregoing, we express no
opinion concerning other laws of the State of Maryland, including the securities
laws of such state, or the laws of any other jurisdiction other than the United
States. No assurance can be given that the law or facts will not change, and we
have not undertaken to advise you or any other person with respect to any event
subsequent to the date hereof.
We are delivering this opinion to you and, without our prior written
consent, no other persons are entitled to rely on this opinion. We consent to
the filing of this opinion as an Exhibit to the Registration Statement. In
giving such consent, we do not thereby concede that we are within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933 or the Rules and Regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Debevoise & Plimpton
