1933 Act File No. 33-31072
1940 Act File No. 811-5876
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
[ ]
Post-Effective Amendment No. 10 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [ ]
Amendment No. 10 [X]
------
LORD ABBETT SERIES FUND, INC.
Exact Name of Registrant as Specified in Charter
767 FIFTH AVENUE, NEW YORK, NY 10153-0203
Address of Principal Executive Office
REGISTRANT'S TELEPHONE NUMBER (212) 848-1800
Kenneth B. Cutler, Vice President & Secretary
767 FIFTH AVENUE, NEW YORK, NY 10153-0203
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
X on (October 31, 1996) pursuant to paragraph (b) Rule 485
60 days after filing pursuant to paragraph (a)(1) Rule 485 on
(date) pursuant to paragraph (a)(1) Rule 485 75 days after
filing pursuant to paragraph (a)(2) Rule 485 on (date)
pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
X this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
LORD ABBETT SERIES FUND, INC.
FORM N-1A
Cross Reference Sheet
Pursuant to Rule 481(a)
EXPLANATORY NOTE
This Post-Effective Amendment No. 10 (the "Amendment") to the
Registrant's Registration Statement relates only to the Pension Class of the
Growth & Income Portfolio of Lord Abbett Series Fund, Inc., a new class of
shares of that Portfolio of the Registrant.
The Registrant has previously registered the following class of shares
of the Growth & Income Portfolio and the following separate Portfolio (Series)
of shares of the Registrant. This Amendment does not relate to, amend or
otherwise affect the Prospectus relating to such class and portfolio contained
in the prior Post-Effective Amendment, and pursuant to Rule 485(d) under the
Securities Act of 1933, does not affect the effectiveness of such Post-Effective
Amendment.
Post-Effective
AMENDMENT NO.
Growth & Income Portfolio 8
(Variable Contract Class)
and Global Equity Portfolio
Form N-1A Location In Prospectus or
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
1 Cover Page
2 Fee Table
3 Performance
4 (a) (i) Cover Page; The Fund
4 (a) (ii) Investment Objectives and Policies
4 (b) (c) Investment Objectives and Policies;
Risk Factors
5 (a) (b) Management
5 (c) N/A
5 (d) N/A
5 (e) Management
5 (f) (i) N/A
5 (f) Purchase and Redemption of Shares;
Portfolio
Transactions
5A N/A
6 (a) Cover Page; Shareholder Rights
6 (b) Management
6 (c) (d) N/A
6 (e) Cover Page
<PAGE>
Form N-1A Location In Prospectus or
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
6 (f) (g) Dividends and Distributions;
Tax Status
7 (a) The Fund
7 (b) (c) Purchase and Redemption of Shares;
Net Asset Value
7 (d) (e) N/A
7 (f) Purchase and Redemption of Shares
8 (a) (b) (c) (d) The Fund; Purchase and Redemption of
Shares
9 N/A
10 Cover Page
11 Cover Page - Table of Contents
12 N/A
13 (a) (b) (c) Investment Objectives and Policies
13 (d) Portfolio Turnover Rates -
Prospectus
14 Directors and Officers
15 (a) (b) (c) Control Persons and Principal
Holders of Securities
16 (a) (i) Investment Advisory and Other Services
16 (a) (ii) Directors and Officers
16 (a) (iii) Investment Advisory and Other Services
16 (b) (e) Investment Advisory and Other Services
16 (c) (d) (f) (g) N/A
16 (h) Investment Advisory and Other
Services
16 (i) N/A
17 (a) Portfolio Transactions
17 (b) N/A
17 (c) Portfolio Transactions
17 (d) (e) N/A
18 (a) The Fund - Prospectus
18 (b) N/A
19 (a) (b) Net Asset Value of Fund Shares
19 (c) N/A
20 Taxes; Tax Status - Prospectus
21 (a) Distribution Agreements
21 (b) (c) N/A
22 N/A
23 Financial Statements
<PAGE>
LORD ABBETT SERIES FUND, INC.
THE GENERAL MOTORS BUILDING
767 FIFTHE AVENUE
NEW YORK, NY 10153-0203
Lord Abbett Series Fund, Inc. (the "Fund") is a diversified open-end management
investment company incorporated under Maryland law on August 28, 1989. The Fund
is a series fund currently comprised of two separate portfolios. This Prospectus
relates only to a new class of shares (the "Pension Class") of the Growth and
Income Portfolio (the "Portfolio"), which Pension Class offered exclusively to
certain pension or retirement plans. The Portfolio's other class of shares,
which are offered to life insurance companies for certain variable annuity
contracts (the "Variable Contract Class"), and the shares of the Fund's Global
Equity Portfolio are described by a separate Prospectus. Each class of shares of
the Portfolio bears certain separate class expenses. See "Shareholder Rights".
The Portfolio seeks long-term growth of capital and income without excessive
fluctuation in market value. There can be no assurance that the Portfolio will
attain its objective. This Prospectus relates to the Pension Class and sets
forth concisely the information that a prospective investor in the Pension Class
should know before investing. Additional information about the Fund has been
filed with the Securities and Exchange Commission and is available without
charge. The Statement of Additional Information is incorporated by reference
into this Prospectus and may be obtained, without charge, by writing to the Fund
or by calling 800-874-3733.
The date of this Prospectus, and the date of the Statement of Additional
Information, is October 31, 1996.
PROSPECTUS
Investors should read and retain this Prospectus for future reference.
Shareholder inquiries should be made in writing directly to the Fund or by
calling 800-821-5129.
Pension Class shares of the Portfolio are not deposits or obligations of, or
guaranteed or endorsed by, any bank, and the shares are not federally insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other agency. An investment in the Portfolio involves risks, including the
possible loss of principal.
CONTENTS PAGE
1 Fee Table 2
2 The Fund 2
3 Investment Objective and Policies 2
4 Risk Factors 4
5 Portfolio Turnover Rates 4
6 Management 4
7 Expenses of the Pension Class 5
8 Shareholder Rights 5
9 Purchase and Redemption of Shares 6
10 Dividends and Distributions 7
11 Tax Status 7
12 Net Asset Value 7
13 Performance 8
14 General Information 8
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>
1. FEE TABLE
A summary of the Portfolio's Pension Class expenses is set forth in the table
below. This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
<TABLE>
<CAPTION>
<S> <C>
Pension Class
Shareholder Transaction Expenses
(as a percentage of offering price)
Maximum Sales Load on Purchases
(See "Purchase and Redemption of Shares") None
Deferred Sales Load
(See "Purchase and Redemption
of Shares") None
Annual Class Operating Expenses
(as a percentage of average net assets)
Management Fee (See "Management") .50%
12b-1 Fee (See "Purchase and Redemption
of Shares") .45%(1)
Other Expenses (See "Management") .25%(2)
Total Operating Expenses 1.20%(2)
<FN>
EXAMPLE: Assume Pension Class' annual return is 5% and there is no change in the
level of expenses described above. For a $1,000 investment, with reinvestment of
all dividends and distributions, you would have paid the following total
expenses if you closed your account after the number of years indicated.
1 year 3 years
Pension Class $12 $38
(1) Although the Pension Class has no front-end sales charge, investors should
be aware that long-term shareholders may pay, under the Rule 12b-1 plan
applicable to the Pension Class (which pays annual 0.20% service and 0.25%
distribution fees), more than the economic equivalent of the maximum front-end
sales charge permitted by certain rules of the National Association of
Securities Dealers, Inc.
(2) Pension Class expenses are estimated for the fiscal year.
The foregoing is provided to give investors a better understanding of the
expenses that are incurred by an investment in Pension Class shares.
<FN>
</TABLE>
2. THE FUND
The Fund is a series fund currently comprised of two separate and active
portfolios.
This Prospectus relates only to the Pension Class of the Growth and Income
Portfolio. Shares of the Variable Contract Class are offered through a separate
Prospectus exclusively to insurance companies as the underlying investment for
certain variable annuity contracts. The only way to obtain beneficial ownership
of Variable Contract Class shares is to purchase such a variable annuity
contract. Because sales charges and expenses vary between these two classes,
performance also will vary. Further information, including a current prospectus,
about the Variable Contract Class and such variable annuity contracts may be
obtained by calling 800-523-1661.
Each share of a class of common stock of the Fund has a par value of $.001 per
share and has one vote and an equal right to dividends and distributions. All
shares have noncumulative voting rights for the election of Directors. Each
share is fully paid, nonassessable and freely transferable. There are no
liquidation, conversion or preemptive rights. The fiscal year-end of the Fund is
December 31.
3. INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Portfolio is long-term growth of capital and
income without excessive fluctuation in market value. There is no assurance that
the investment objective of the Portfolio will be met.
The Portfolio intends to keep its assets invested in those securities which are
selling at reasonable prices in relation to value and, to do so, it may have to
forgo some opportunities for gains when, in managements' judgment, they carry
excessive risk. The Fund is managed on a day-to-day basis by its officers under
the overall direction of the Board of Directors with the advice of Lord, Abbett
& Co.
The Portfolio will try to anticipate major changes in the economy and select
stocks which it believes will benefit most from these changes.
The Portfolio will normally invest in common stocks (including securities
convertible into common stocks) of large, seasoned companies which are expected
to show above-average growth and which are in sound financial condition.
Although the prices of common stocks fluctuate and their dividends vary,
historically, common stocks have appreciated in value and their dividends have
increased when the companies they represent have prospered and grown. The Fund
Management will constantly seek to balance the opportunity for profit against
the risk of loss. In the past, very few industries have continuously provided
the best investment opportunities. The Portfolio will take a flexible approach
and adjust the Portfolio to reflect changes in the opportunity for sound
investments relative to the risks assumed. Therefore, the Portfolio will sell
stocks that are judged to be overpriced and reinvest the proceeds in other
securities which are believed to offer better values for the Portfolio.
The Portfolio will not purchase securities for trading purposes. To create
reserve purchasing power, the Portfolio may invest in straight bonds and other
fixed income securities.
OTHER INVESTMENT POLICIES AND TECHNIQUES OF THE PORTFOLIO
When the Fund Management believes the Portfolio should assume a temporary
defensive position because of unfavorable investment conditions, the Portfolio
may temporarily hold its assets in cash and high- quality short-term money
market instruments.
See "Risk Factors" below for a discussion of special diversification standards
which the Portfolio will meet in the event it is in a temporary defensive
position.
The Portfolio intends to utilize from time to time one or more of the investment
techniques identified below and described in the Statement of Additional
Information, including covered call options, rights and warrants and repurchase
agreements. It is the Portfolio's current intention that no more than 5% of the
Portfolio's net assets will be at risk in the use of any one of such investment
techniques. While some of these techniques involve risk when utilized
independently, the portfolio intends to use them to reduce risk and volatility
in the Portfolio, although this result cannot be assured by the use of such
investment techniques.
COVERED CALL OPTIONS. The Portfolio may write call options on securities it
owns. A call option on stock gives the purchaser of the option, upon payment of
a premium to the writer of the option, the right to call upon the writer to
deliver a specified number of shares of a stock on or before a fixed date at a
predetermined price.
RIGHTS AND WARRANTS. The Portfolio may invest in rights and warrants to purchase
securities. Included within these purchases, but not exceeding 2% of the value
of its net assets, may be warrants which are not listed on the New York Stock
Exchange or American Stock Exchange.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements with
respect to a security. A repurchase agreement is a transaction by which the
Portfolio acquires a security and simultaneously commits to resell that security
to the seller (a bank or securities dealer) at an agreed upon price on an agreed
upon date. The Portfolio requires at all times that the repurchase agreement be
collateralized by cash or U. S. Government securities having a value equal to,
or in excess of, the value of the repurchase agreement. Such agreements permit
the Portfolio to keep all of the its assets at work while retaining flexibility
in pursuit of investments of a longer-term nature.
OTHER POLICIES OF THE PORTFOLIO
It is our current intention that no more than 5% of the Portfolio's net assets
will be at risk in the use of any one of the policies identified below.
CLOSED-END INVESTMENT COMPANIES. The Portfolio may invest in closed-end
investment companies if bought in the open market with a fee or commission no
greater than the customary broker's commission. Shares of such investment
companies sometimes trade at a discount or premium in relation to their net
asset value.
LENDING OF PORTFOLIO SECURITIES. The Portfolio may seek to earn income by
lending its securities if the loan is collateralized and complies with
regulatory requirements.
EMERGENCY BOROWING. The Portfolio will be permitted to borrow money up to
one-third of the value of its total assets taken at current value but only from
banks as a temporary measure for extraordinary or emergency purposes. Beyond 5%
of the Portfolio's total assets (at current value), this borrowing is not for
investment leverage to purchase securities. As a matter of operating policy, the
Portfolio will not borrow more than 25% of its total assets taken at current
value.
CHANGE IN INVESTMENT OBJECTIVE
The Portfolio will not change its investment objective without Portfolio
shareholder approval. However, the foregoing policies and techniques of the
Portfolio are not fundamental. Therefore, if it is determined that the objective
of the Portfolio can be achieved better by a substantive change in such a policy
or technique, the change will be made without Portfolio shareholder approval by
disclosing it in the Prospectus.
INVESTMENT RESTRICTIONS
In addition to the investment objective set forth above, certain restrictions
relating to the investment of assets of the Portfolio are set forth in the
Statement of Additional Information.These investment restrictions also are
deemed fundamental and neither these restrictions nor the Portfolio's investment
objective may be changed without the approval of the holders of a majority of
the outstanding shares of each affected class of the Portfolio. For this
purpose, the holders of the shares of the Pension Class will vote together as a
single class with the holders of shares of each other class of the Portfolio.
4. RISK FACTORS
Since the Portfolio's other class of shares, the Variable Contract Class, was
established as the underlying investment for variable contracts issued by life
insurance companies, the Portfolio assets attributable to the Pension Class of
shares also must meet the variable contract diversification requirements under
Section 817(h) of the Internal Revenue Code. However, under normal
circumstances, when the Portfolio is fully invested, it will meet the
diversification standards for a regulated investment company and the variable
contract diversification requirements, although complied with, will not come
into play. If the Portfolio is temporarily defensive, such variable contract
diversification requirements are more likely to come into play. See the
Statement of Additional Information for a description of the variable contract
diversification requirements.
The diversification standards for a regulated investment company require at the
end of each quarter of the taxable year that (a) not more than 25% of the
Portfolio's total assets be invested in any one issuer and (b) with respect to
50% of the Portfolio's total assets, no more than 5% of the Portfolio's total
assets be invested in any one issuer (except U.S. Government securities). The
Portfolio as a "diversified investment company" under the Investment Company Act
of 1940, as amended (the"Act") is prohibited, with respect to 75% of the value
of its total assets, from investing more than 5% of its total assets in
securities of any one issuer other than U.S. Government securities.
The Portfolio will be managed in such a manner as to comply with these
diversification requirements. It is possible that in order to comply with the
diversification requirements, less desirable investment decisions may be made
which would affect the investment performance of the Portfolio.
The prices of long-term debt securities are more volatile than those of
short-term debt securities. When interest rates go up or down, the market value
of such long-term debt securities tends to go down or up, respectively, to a
greater extent than in the case of short-term debt securities.
5. PORTFOLIO TURNOVER RATES
For the years ended December 31, 1994 and 1995, the portfolio turnover rates of
the Portfolio were 68.94% and 70.30%, respectively. Higher portfolio turnover
rates may involve correspondingly higher brokerage costs which would have to be
borne directly by the Portfolio and ultimately by its shareholders.
6. MANGEMENT
The Portfolio is managed by the Fund's officers on a day-to-day basis under the
overall direction of the Fund's Board of Directors. The Portfolio employs Lord
Abbett as investment manager pursuant to a Management Agreement. Lord Abbett has
been an investment manager for over 65 years and currently manages approximately
$20 billion in a family of mutual funds and other advisory accounts. Lord Abbett
provides the Portfolio with investment management services and executive and
other personnel, pays the remuneration of its officers, provides the Portfolio
with office space and pays for ordinary and necessary office and clerical
expenses relating to research, statistical work and supervision of the Portfolio
and certain other costs. The Fund pays all other expenses not expressly assumed
by Lord Abbett. See "expenses of the Pension Class" below. Lord Abbett provides
similar services to twelve other funds having their own investment objectives
and also advises other investment clients.
Mr. W. Thomas Hudson, Jr. is Executive Vice President of the Fund and is
primarily responsible for the day-to-day management of the Portfolio. Mr. Hudson
has been employed by Lord Abbett for thirteen years.
Under the Management Agreement, the Portfolio is obligated to pay Lord Abbett a
monthly fee, based on average daily net assets for the Portfolio for each month
at an annual rate of 0.50 of 1%. Lord Abbett may waive its management fee and/or
advance other expenses of the Portfolio.
In selecting broker-dealers to execute portfolio transactions for the Fund's
Portfolio, if two or more broker-dealers are considered capable of best
execution, the Fund may prefer the broker-dealer who has sold Portfolio shares
and/or shares of other Lord Abbett-sponsored funds.
7. EXPENSES OF THE PENSION CLASS
The Pension Class will bear the cost of the Rule 12b-1 Plan (discussed under
"Purchase and Redemption of shares" below) and other expenses and fees
attributable and allocated to the Pension Class. Such expenses could include (a)
transfer and shareholder servicing agent fees and shareholder servicing costs
identified as being attributable to the Pension Class, (b) stationery, printing,
postage and delivery expenses related to preparing and distributing materials
such as shareholder reports, prospectuses and proxy statements to shareholders
of the Pension Class, (c) registration fees incurred by the Pension Class (d)
expenses of administrative and personnel services as required to support the
shareholders of the Pension Class, (e) accounting expenses, auditors fees,
litigation expenses and legal fees and expenses relating to the Pension Class,
(f) expenses incurred in connection with shareholders meetings as a result of
issues relating to the Pension Class and (g) other expenses related solely to
the Pension Class. As provided in a revenue ruling obtained from the Internal
Revenue Service, such expenses allocated to a class (other than Rule 12b-1 Plan
expenses and shareholder services plan fees) may not equal or exceed during a
year 0.50 of 1% of the average net asset value of the class within the Portfolio
that has the smaller average net asset value.
Expenses attributable to the Portfolio, but not a particular class within the
Portfolio, will be allocated to the Pension Class and each other class of the
Portfolio based upon their relative net asset values. Such Portfolio expenses
could include advisory fees and custodian fees and fees and expenses related to
the preparation of separate documents of the Portfolio, such as an annual report
for the Portfolio.
Fund expenses that are not attributable to a particular portfolio or class will
be allocated among the portfolios based upon their relative net asset values,
and any expenses allocated in this manner to the Portfolio will be allocated to
the Pension Class and each other class of the Portfolio as described above. Such
Fund expenses could include directors' fees, fees and expenses related to the
preparation of documents of the Fund, such as an annual report of the Fund,
accounting expenses, auditors fees and legal expenses relating to the Fund and
expenses incurred in connection with shareholders meetings involving all the
portfolios and classes of the Fund.
8. SHAREHOLDER RIGHTS
Each Pension Class share represents from time to time a proportionate interest
in the assets of the Portfolio determined as set forth below under
"Net Asset Value". On any matters submitted for a vote of shareholders, all
shares of the Portfolio (and of any other portfolio) then issued and outstanding
shall be voted as a single class, except that matters concerning fewer than all
classes or portfolios shall be voted upon by the class(es) or portfolio(s) that
are affected. The holder of each share of stock entitled to vote will be
entitled to one vote for each full share and a fractional vote for each
fractional share of stock. Shares of one class may not bear the same economic
relationship to the Fund as shares of another class.
The Fund's By-Laws provide that the Fund shall not hold an annual meeting of its
shareholders in any year unless one or more matters are required to be acted on
by shareholders under the Act, or unless called at the request in writing of a
majority of the Board of Directors or by shareholders holding at least
one-quarter of the shares of the Fund outstanding and entitled to vote at the
meeting. The Fund will hold a shareholder meeting to fill existing vacancies on
the Board in the event that less than a majority of Directors were elected by
the shareholders. The Directors also shall call a meeting of shareholders for
the purpose of voting upon the question of removal of any Director when
requested in writing to do so by the record holders of not less than 10 percent
of the outstanding shares. Under the By-Laws of the Fund and in accordance with
the Act, shareholder approval of the independent auditors of the Fund will not
be required except when shareholder meetings are held.
9. PURCHASE AND REDEMPTION OF SHARES
Pension Class shares are currently sold at net asset value (see below) to the
trustees of, or employer-sponsors with respect to, pension or retirement plans
with at least 100 eligible employees (such as a plan under Section 401(a),
401(k) or 457(b) of the Internal Revenue Code) which engage an investment
professional providing, or participating in an agreement to provide, certain
record keeping, administrative and/or sub-transfer agency services to the Fund
on behalf of the record or beneficial Pension Class shareholders.
Purchases and redemption of Pension Class shares will be effected at net asset
value by trustees, custodians or employers on behalf of plan participants who
will not deal directly with the Fund.
DISTRIBUTION OF PENSION CLASS SHARES
Pursuant to a Distribution Agreement (the "Agreement") between Lord Abbett
Distributor LLC ("Lord Abbett Distributor") and the Fund, Lord Abbett
Distributor is the distributor of the Pension Class shares. The shares of the
Pension Class are purchased and redeemed at net asset value. Lord Abbett
Distributor reserves the right to suspend, change or withdraw the offering of
shares of the Pension Class or any of the terms of such offering.
PENSION CLASS RULE 12B-1 PLAN. The Fund has adopted on behalf of the Portfolio a
Pension Class share Rule 12b-1 Plan (the "Plan") which authorizes the payment of
fees to authorized institutions (except as to certain accounts for which
tracking data is not available) in order to provide additional incentives for
them (a) to provide continuing information and investment services to their
Pension Class shareholder accounts and otherwise to encourage those accounts to
remain invested in the Portfolio and (b) to sell Pension Class shares of the
Portfolio. Under the Plan, in order to save on the expense of shareholders
meetings and to provide flexibility to the Board of Directors, the Board,
including a majority of the outside directors who are not "interested persons"
of the Fund as defined in the Act, is authorized to approve annual fee payments
from the Pension Class assets of up to 0.75 of 1% of the average net asset value
of such assets consisting of distribution and service fees, at maximum annual
rates not exceeding 0.50 and 0.25 of 1%, respectively (the "Fee Ceiling").
Under the Plan, the Board has approved payments from Pension Class assets to
Lord Abbett Distributor which uses or passes on to authorized institutions (1)
an annual service fee (payable quarterly) of 0.20 of 1% of the average daily net
asset value of the Pension Class shares serviced by authorized institutions, (2)
a distribution fee of up to 0.25 of 1% of the average daily net asset value of
the Pension Class shares sold by authorized institutions which have a
satisfactory program for the promotion of such shares. Institutions and persons
permitted by law to receive such fees are "authorized institutions".
Under the Plan, Lord Abbett Distributor is permitted to use payments received to
provide continuing services to Pension Class shareholder accounts not serviced
by authorized institutions and, with Board approval, to finance any activity
which is primarily intended to result in the sale of Pension Class shares. Any
such payments are subject to the Fee Ceiling. Any payments under the Plan not
used by Lord Abbett Distributor in this manner are passed on to authorized
institutions.
Lord Abbett Distributor may pay additional concessions to authorized
institutions which, during a specified period, sell a minimum dollar amount of
Pension Class shares and/or shares of other Lord Abbett-sponsored funds. In some
instances, such additional concessions will be offered only to certain
authorized institutions expected to sell significant amounts of shares. These
additional concessions may be paid from Lord Abbett Distributor's own resources
and will be made in the form of cash or, if permitted, non-cash payments. The
non-cash payments will include business seminars at resorts or other locations,
including meals and entertainment, or the receipt of merchandise. The cash
payments will include payment of various business expenses of the authorized
institutions.
Authorized institutions may receive different compensation with respect to one
class of Portfolio shares over the other.
10. DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income may be taken in cash or additional shares
at net asset value (without a sales charge) and will be paid to shareholders in
July and December.
A long-term capital gains distribution is made if the Portfolio has net profits
during a year from sales of securities which the Portfolio has held more than
one year. If the Portfolio realizes net short-term capital gains, they also will
be distributed. Any capital gains will be distributed annually in December. You
may take them in cash or additional shares at net asset value.
11. TAX STATUS
It is the intention of the Fund to have the Portfolio qualify, and for the
fiscal year ended December 31, 1995 it did qualify, as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the"Code"). The Portfolio is treated as a separate entity for federal income
tax purposes and, therefore, the investments and results of the Portfolio are
determined separately for purposes of determining whether the Portfolio
qualifies as a "regulated investment company" and for purposes of determining
net ordinary income (or loss) and net realized capital gains (or losses).
Shareholders may be subject to a $50 penalty under the Code and the Fund may be
required to withhold and remit to the U.S. Treasury a portion (31%) of any
redemption proceeds, and of any dividend or distribution on any account, where
the payee (shareholder) failed to provide a correct taxpayer identification
number or to make certain required certifications.
12. NET ASSET VALUE
Pension Class shares are sold and redeemed at a price equal to the net asset
value per share next determined after receipt of the sales order or request for
redemption. Net asset value per Pension Class share is determined as of the
close of the New York Stock Exchange on each day that the New York Stock
Exchange is open for business by taking the Pension Class' pro rata share of the
value of the total assets of the Portfolio, deducting the Pension Class' pro
rata share of Portfolio liabilities common to all classes, deducting the
liabilities allocated specifically to the Pension Class, and then dividing the
result by the number of Pension Class shares outstanding at the time of
calculation.
Orders for shares received by the Fund prior to the close of the New York Stock
Exchange ("NYSE"), or received by authorized institutions prior to such close
and received by Lord Abbett Distributor in proper form prior to the close of its
business day are executed at the applicable per share net asset value effective
as of the close of the NYSE that next business day. The authorized institution
is responsible for the timely transmission of orders to Lord Abbett Distributor.
A business day is a day on which the NYSE is open for trading.
Securities that are listed on a securities exchange are valued at their closing
sales price on the day of the valuation. Price valuations for listed securities
are based on market quotations where the security is primarily traded or, if not
available, are valued at the mean of the bid and asked prices on any valuation
date. Unlisted securities in the Portfolio are primarily valued based on their
latest quoted bid price or, if not available, are valued by a method determined
by the Directors to accurately reflect fair value. Money market instruments
maturing in 60 days or less are valued on the basis of amortized cost, which
means that securities are valued at their acquisition cost to reflect a constant
amortization rate to maturity of any premium or discount, rather than at current
market value.
13. PERFORMANCE
From time to time, advertisements and other sales materials for the Fund may
include information concerning the historical performance of the Portfolio.
Total return information will include the Portfolio's average annual compounded
rate of return with respect to a class for a given period, based upon the value
of the class' shares acquired through a hypothetical $1000 investment at the
beginning of the specified period and the net asset or redemption value of such
shares at the end of the period, assuming reinvestment of all dividends and
distributions at net asset value. In lieu of or in addition to total return
calculations, such information may include performance rankings and similar
information from independent organizations such as Lipper Analytical Services,
Inc., Business Week, Forbes or other industry publications.
"Yield" for the classes of the Portfolio is calculated by dividing each class'
annualized net investment income per share during a recent 30-day period by the
net asset value per share on the last day of that period.
Total return figures utilized by the Fund are based on historical performance
and are not intended to indicate future performance. Total return and net asset
value per share can be expected to fluctuate over time.
14. GENERAL INFORMATION
The Fund's Custodian is The Bank of New York, 48 Wall Street, New York, New York
10286. The Fund's transfer agent and dividend disbursing agent is United
Missouri Bank of Kansas City, N.A., Tenth and Grand, Kansas City, Missouri
64141. The Fund's subtransfer and servicing agent with respect to the Pension
Class shares is Merrill Lynch Pierce, Fenner & Smith Incorporated, 250 Vescey
Street, World Financial Center, North Tower, New York, New York 10281. The
Fund's auditors are Deloitte & Touche LLP, Two World Financial Plaza, New York,
New York 10281. The Fund's counsel is Debevoise & Plimpton, 875 Third Avenue,
New York, New York 10022.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
LORD ABBETT SERIES FUND, INC.
October 31, 1996
This Statement of Additional Information is not a Prospectus. A Prospectus
may be obtained from Lord Abbett Distributor LLC ("Lord Abbett Distributor") at
The General Motors Building, 767 Fifth Avenue, New York, N.Y. 10153-0203. This
Statement relates to, and should be read in conjunction wi th, the Prospectus
dated October 31, 1996, both of which initially offer to certain pension and
retirement plans a new class of shares (the "Pension Class") of the Growth &
Income Portfolio (the "Portfolio"). The Board of Directors will allocate these
authorized shares among the classes of each Ser ies from time to time.
Rule 18f-2 under the Investment Company Act of 1940 as amended (the "Act")
provides that any matter required to be submitted, by the provisions of the Act
or applicable state law or otherwise, to the holders of the outstanding voting
securities of an investment company such as the Fund shall not be deemed to have
been effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each class affected by such matter. Rule 18f-2 further
provides that a class shall be deemed to be affected by a matter unless the
interests of each class in the matter are substan tially identical or the matter
does not affect any interest of such class. However, the Rule exempts the
selection of independent public accountants, the approval of principal
distributing contracts and the election of directors from its separate voting
requirements.
Shareholder inquiries should be made by writing directly to the Fund or by
calling (800) 874-3733.
TABLE OF CONTENTS Page
Investment Objective and Policies . . 2
Directors and Officers. . . . . . . . . . . . . . . . . . 5
Control Persons and Principal Holders of Securities . . . 7
Investment Advisory and Other Services. . . . . . . . . . 8
Portfolio Transactions. . . . . . . . . . . . . . . . . . 9
Net Asset Value of Fund Shares. . . . . . . . . . . . . .10
Dividends and Distributions . . . . . . . . . . . . . . .11
Distribution Arrangements . . . . . . . . . . . . . . . .11
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .12
Calculation of Performance Data . . . . . . . . . . . . .12
Financial Statements. . . . . . . . . . . . . . . . . . .14
1.
Investment Objective and Policies
The Portfolio's investment objective and policies are described in the
Prospectus relating to the Pension Class of the Portfolio under "Investment
Objective and Policies". In addition to this investment objective, the Portfolio
is subject to the following investment restrictions which cannot be c hanged
without approval of a majority of the outstanding shares of the Portfolio. The
Portfolio may not: (1) sell short securities or buy securities or evidences of
interests therein on margin, although it may obtain short-term credit necessary
for the clearance of purchases of securities; (2) buy or sell put or call
options, although it may buy, hold or sell rights or warrants, write covered
call options and enter into closing purchase transactions as discussed below;
(3) borrow money which is in excess of one-third of the value of its total
assets taken at market value (including the amou nt borrowed) and then only from
banks as a temporary measure for extraordinary or emergency purposes (borrowings
beyond 5% of such total assets, may not be used for investment leverage to
purchase securities but solely to meet redemption requests where the liquidation
of the Portfolio's investment is deemed to be inconvenient or disadvantageous);
(4) invest in securities or other assets not readily marketable at the time of
purchase or subject to legal or contractual restrictions on resale except as
described under "Restricted or Not Readily Marketable Securities for the Fund's
Portfolio" be low; (5) act as underwriter of securities issued by others, unless
it is deemed to be one in selling a portfolio security requiring registration
under the Securities Act of 1933, such as those described under "Restricted or
Not Readily Marketable Securities for the Fund's Portfolio" below; (6) lend
money or securities to any person except that it may enter into short-term
repurchase agreements with sellers of securities it has purchased, and it may
lend its portfolio securities to registered broker-dealers where the loan is
100% secured by cash or its equivalent as long as it complies with r egulatory
requirements and the Fund deems such loans not to expose the Portfolio to
significant risk (investment in repurchase agreements exceeding 7 days and in
other illiquid investments is limited to a maximum of 5% of the Portfolio's
assets); (7) pledge, mortgage or hypothecate its assets; howe ver, this
provision does not apply to permitted borrowing mentioned above or to the grant
of escrow receipts or the entry into other similar escrow arrangements arising
out of the writing of covered call options; (8) buy or sell real estate
including limited partnership interests therein (except se curities of
companies, such as real estate investment trusts, that deal in real estate or
interests therein), or oil, gas or other mineral leases, commodities or
commodity contracts in the ordinary course of its business, except such
interests and other property acquired as a result of owning other securities,
though securities will not be purchased in order to acquire any of these
interests; (9) invest more than 5% of its gross assets, taken at market value at
the time of investment, in companies (including their predecessors) with less
than three years' continuous operation; (10) buy secur ities if the purchase
would then cause the Portfolio to have more than (i) 5% of its gross assets, at
market value at the time of purchase, invested in securities of any one issuer,
except securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, or (ii) 25% of its gross assets, at market value at the time
of purchase, invested in securities issued or guaranteed by a foreign
government, its agencies or instrumentalities; (11) buy voting securities if the
purchase would then cause the Portfolio to own more than 10% of the outstanding
voting stock of any one is suer; (12) own securities in a company when any of
its officers, directors or security holders is an officer or director of the
Fund or an officer, director or partner of the Investment Manager, if after the
purchase any of such persons owns beneficially more than 1/2 of 1% of such
securities and s uch persons together own more than 5% of such securities; (13)
concentrate its investments in any particular industry, but if deemed
appropriate for attainment of its investment objective, up to 25% of its gross
assets (at market value at the time of investment) may be invested in any one
industry classification used for investment purposes; or (14) buy securities
from or sell them to the Fund's officers, directors, or employees, or to the
Investment Manager or to its partners, directors and employees.
Changes in Fund Objectives, Restrictions, Policies and Strategies
The Portfolio's investment objective described in the Prospectus and the
Portfolio's investment restrictions described above in this Statement of
Additional Information, both under the same heading "Investment Objective and
Policies", can be changed only with the approval of a majority of the outs
tanding shares of the Portfolio. All of the Portfolio's policies and techniques,
including those described below, can be changed without such approval.
Other Investments. Described below are other Portfolio policies and techniques
applicable to the Portfolio as indicated.
Investment Techniques for the Fund's Portfolio
Fund Management intends to utilize from time to time one or more of the
investment techniques described below including covered call options, rights and
warrants and repurchase agreements. It is the Fund Management's current
intention that no more than 5% of the Portfolio's net assets will be at r isk in
the use of any one of such investment techniques. While some of these techniques
involve risk when utilized independently, the Fund Management intends to use
them to reduce risk and volatility.
Covered Call Options. The Portfolio may write call options on securities it
owns. A call option on stock gives the purchaser of the option, upon payment of
a premium to the writer of the option, the right to call upon the writer to
deliver a specified number of shares of a stock on or before a f ixed date at a
predetermined price.
The writing of call options will, therefore, involve a potential loss of
opportunity to sell securities at higher prices. The writer of a fully
collateralized call option assumes the full downside risk of the securities
subject to such option. In addition, in exchange for the premium received, th e
writer of the call gives up the gain possibility of the stock appreciating
beyond the call price. While an option that has been written is in force, the
maximum profit that may be derived from the optioned stock is the sum of the
premium less brokerage commissions and fees plus the difference be tween the
strike price of the call and the market price of the underlying security.
The Portfolio will not use call options on individual equity securities traded
on foreign securities markets.
The Fund's custodian will segregate cash or permitted securities in an amount
not less than the value of the Portfolio's assets committed to written covered
call options. If the value of the securities segregated declines, additional
cash or permitted securities will be added on a daily basis (i. e. marked to
market) so that the segregated amount will not be less than the amount of the
Portfolio's commitments with respect to such written options.
Rights and Warrants. The Portfolio may invest in rights and warrants to purchase
securities. Included within that amount, but not to exceed 2% of the value of
the Portfolio's net assets, may be warrants which are not listed on the New York
Stock Exchange or American Stock Exchange.
Rights represent a privilege offered to holders of record of issued securities
to subscribe (usually on a pro rata basis) for additional securities of the same
class, of a different class, or of a different issuer, as the case may be.
Warrants represent the privilege to purchase securities at a s tipulated price
and are usually valid for several years. Rights and warrants generally do not
entitle a holder to dividends or voting rights with respect to the underlying
securities nor do they represent any rights in the assets of the issuing
company.
Also, the value of a right or warrant may not necessarily change with the value
of the underlying securities, and rights and warrants cease to have value if
they are not exercised prior to their expiration date.
Repurchase Agreements. The Portfolio may enter into repurchase agreements with
respect to a security. A repurchase agreement is a transaction by which the
Portfolio acquires a security and simultaneously commits to resell that security
to the seller (a bank or securities dealer) at an agreed-upo n price on an
agreed-upon date. The resale price reflects the purchase price plus an
agreed-upon market rate of interest which is unrelated to the coupon rate or
date of maturity of the purchased security. In this type of transaction, the
securities purchased by the Portfolio have a total value i n excess of the value
of the repurchase agreement. The Portfolio requires at all times that the
repurchase agreement be collateralized by cash or U.S. government securities
having a value equal to, or in excess of, the value of the repurchase agreement.
Such agreements permit the Portfolio to kee p all of its assets at work while
retaining flexibility in pursuit of investments of a longer-term nature.
The use of repurchase agreements involves certain risks. For example, if the
seller of the agreement defaults on its obligation to repurchase the underlying
securities at a time when the value of these securities has declined, the
Portfolio may incur a loss upon disposition of them. If the selle r of the
agreement becomes insolvent and subject to liquidation or reorganization under
the Bankruptcy Code or other laws, a bankruptcy court may determine that the
underlying securities are collateral not within the control of the Portfolio and
therefore subject to sale by the trustee in bankruptc y. Even though the
repurchase agreements may have maturities of seven days or less, they may lack
liquidity, especially if the issuer encounters financial difficulties. While the
Portfolio acknowledges these risks, it is expected that they can be controlled
through stringent selection criteria an d careful monitoring procedures. The
Portfolio intends to limit repurchase agreements to transactions with dealers
and financial institutions believed by the Portfolio to present minimal credit
risks. The Portfolio will monitor creditworthiness of the repurchase agreement
sellers on an ongoing ba sis.
Restricted or Not Readily Marketable Securities for the Portfolio
Although the Portfolio has no current intention of investing in such securities
in the foreseeable future, no more than 5% of the value of the Portfolio may be
invested in securities with legal or contractual restrictions on resale
("restricted securities") (excluding securities qualifying for res ale under SEC
Rule 144A that are determined by the Board, or by Lord Abbett & Co. pursuant to
the Board's delegation, to be liquid securities), repurchase agreements with
maturities of more than seven days, over-the-counter options and securities
which are not readily marketable.
Lending of Securities by the Portfolio
Although the Portfolio has no current intention of doing so in the foreseeable
future, the Portfolio may seek to earn income by lending portfolio securities.
Under present regulatory policies, such loans may be made to member firms of the
New York Stock Exchange and are required to be secured con tinuously by
collateral consisting of cash, cash equivalents, or United States Treasury bills
maintained in an amount at least equal to the market value of the securities
loaned. The Portfolio will have the right to call a loan and obtain the
securities loaned at any time on five days' notice. Du ring the existence of a
loan the Portfolio will receive the income earned on investment of collateral.
The aggregate value of the securities loaned will not exceed 15% of the value of
the Portfolio's total assets.
Portfolio Turnover Rates
During the fiscal year ended December 31, 1995, the portfolio turnover rate of
the Portfolio was 70.30%. During the fiscal year ended December 31, 1994, the
portfolio turnover rate of the Portfolio was 68.94%.
2.
Directors and Officers
The following director is a partner of Lord, Abbett & Co., The General Motors
Building, 767 Fifth Avenue, New York, N.Y. 10153-0203 ("Lord Abbett"). He has
been associated with Lord Abbett for over five years and is also an officer and
director or trustee of the twelve other Lord Abbett-sponsored funds described
under "Investment Advisory and Other Services." He is an "interested person" as
defined in the Investment Company Act of 1940, as amended, (the "Act") and as
such, may be considered to have an indirect financial interest in any Rule 12b-1
Plan adopted by the Portfolio.
Robert S. Dow, Age 51, Chairman and President
The following outside directors are also directors of the twelve other Lord
Abbett sponsored funds referred to above.
E. Thayer Bigelow
Time Warner Cable
300 First Stamford Place
Stamford, Connecticut
President and Chief Executive Officer of Time Warner Cable Programming, Inc.
Formerly President and Chief Operating Officer of Home Box Office, Inc. Age 55.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 65.
John C. Jansing
162 South Beach Road
Hobe Sound, Florida
Retired. Formerly Chairman of Independent Election Corporation of America, a
proxy tabulating firm. Age 70.
C. Alan MacDonald
The Marketing Partnership, Inc.
27 Signal Road
Stamford, Connecticut
General Partner, The Marketing Partnership, Inc., a full service marketing
consulting firm. Formerly Chairman and Chief Executive Officer of Lincoln
Snacks, Inc., manufacturer of branded snack foods (1992-1994). Formerly
President and Chief Executive Officer of Nestle Foods Corp., and prior to tha t,
President and Chief Executive Officer of Stouffer Foods Corp., both subsidiaries
of Nestle S.A. Switzerland. Currently serves as Director of Den West Restaurant
Co., J.B. Williams, and Fountainhead Water Company. Age 63.
Hansel B. Millican, Jr.
Rochester Button Co.
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 68.
Thomas J. Neff
Spencer Stuart & Associates
277 Park Avenue
New York, New York
Chairman of Spencer Stuart U.S., an executive search consulting firm. Age 59.
The second column of the following table sets forth the compensation accrued
for the Fund's outside directors. The third and fourth columns set forth
information with respect to the retirement plan for outside directors maintained
by the Lord Abbett-sponsored funds. The fifth column sets forth t he total
compensation payable by such funds to the outside directors. The information
provided is for the fiscal year ended December 31, 1995. No director of the Fund
associated with Lord Abbett and no officer of the Fund received any compensation
from the Fund for acting as a director or officer .
<TABLE>
<CAPTION>
Compensation Table for the Fiscal Year Ended December 31, 1995
(1) (2) (3) (4) (5)
Pension or Estimated Annual For Year Ended
Retirement Benefits Benefits Upon December 31, 1995
Accrued by Retirement Proposed Total Compensation
Aggregate the Twelve to be Paid by the Accrued by the
Compensation Other Lord Twelve Other Lord Twelve Other Lord
Accrued by Abbett-sponsored Other Lord Abbett- Abbett-sponsored
NAME OF DIRECTOR the Fund(1) Funds sponsored Funds(2) Funds(3)
- ---------------- ---------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
E.Thayer Bigelow $407 $9,772 $33,600 $41,700
Stewart S. Dixon $393 $22,472 $33,600 $42,000
John C. Jansing $420 $28,480 $33,600 $42,960
C. Alan MacDonald $401 $27,435 $33,600 $42,750
Hansel B. Millican, Jr $420 $24,707 $33,600 $43,000
Thomas J. Neff $410 $16,126 $33,600 $42,000
<FN>
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on net
assets of each fund. A portion of the fees payable by the Fund to its outside
directors are being deferred under a plan that deems the deferred amounts to be
invested in shares of the Fund for later distribution to the directors. The
amounts accrued by the Fund for the year ended December 31, 1995, are as set
forth after each outside Director's name above. The total amount accrued for
each outside Director since the beginning of his tenure with the Fund, together
with dividends reinvested and changes in net asset value applicable to such
deemed investments, were as follows as of December 31, 1995: Mr. Bigelow, $547;
Mr. Dixon, $724; Mr. Jansing, $1,180; Mr. MacDonald, $699; Mr. Millican, $1,175;
and Mr. Neff, $1,166.
2. Each Lord Abbett-sponsored fund has a retirement plan providing that outside
directors will receive annual retirement benefits for life equal to 80% of their
final annual retainers following retirement at or after age 72 with at least 10
years of service. Each plan also provides for a reduced benefit upon early
retirement under certain circumstances, a pre- retirement death benefit and
actuarially reduced joint-and-survivor spousal benefits. The amounts stated
would be payable annually under such retirement plans if the director were to
retire at age 72 and the a nnual retainers payable by such funds were the same
as they were today. The amounts accrued in column 3 were accrued by Lord
Abbett-sponsored funds during the fiscal year ended December 31, 1995 with
respect to the retirement benefits in column 4.
3. This column shows aggregate compensation, including director's fees and
attendance fees for board and committee meetings, of a nature referred to in
footnote one, accrued by the Lord Abbett-sponsored funds during the year ended
December 31, 1995.
</FN>
</TABLE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Brown, Carper, Cutler, Ms. Foster, Messrs. Morris, Noelke, Nordberg and
Walsh are partners of Lord Abbett; the others are employees: William T. Hudson,
age 53, Executive Vice President; Kenneth B. Cutler, age 64, Vice President and
Secretary; Stephen I. Allen, age 43; Zane E. Brown, age 44; Daniel E. Carper,
age 44; Daria L. Foster, age 42; Robert G. Morris, age 51; Robert Noelke, age 3
9; E. Wayne Nordberg, age 59; Paul A. Hilstad, age 53 (with Lord Abbett since
1995 - formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.); Thomas F. Konop, age 54; Victor W. Pizzolato, age
63; John J. Walsh, age 60, Vice Presidents; and Keith F. O'Con nor, age 40, Vice
President and Treasurer.
The Fund's by-laws provide that the Fund shall not hold an annual meeting of its
stockholders in any year unless one or more matters are required to be acted on
by stockholders under the Act, or unless called at the request of a majority of
the Board of Di rectors or by stockholders holding at least one-quarter of the
stock of the Fund outstanding and entitled to vote at the meeting. When any such
annual meeting is held, the stockholders will elect directors to hold the
offices of any directors who have held office for more than one year or who have
been elected by the Board of Directors to fill vacancies. Under the By-laws and
in accordance with the Act, stockholder approval of the independent auditors of
the Fund will not be required except when such meetings are held.
3.
Control Persons and Principal Holders of Securities Substantial Shareholders
As of March 29, 1996, COVA Variable Annuity Account One, a separate account of
COVA Financial Services Life Insurance Company, One Tower Lane, Oakbrook
Terrace, Illinois 60181 ("COVA Life"), was known to the Board of Directors and
the management of the Fun d to own of record 13,680,048 shares representing
0.11% of the total shares issued and outstanding of the Portfolio and Lord
Abbett was known to own of record 15,185 shares representing 99.89% of the total
shares issued and outstanding. As of that date, the officers and directors of
the Fund toget her owned no variable contracts.
4.
Investment Advisory and Other Services
As described under "Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. The ten general partners of Lord Abbett, all of whom are
officers and/or directors of the Fund, are: Stephen I. Allen, Zane E. Brown,
Daniel E. Carper, Kennet h B. Cutler, Robert S. Dow, Daria L. Foster, Robert G.
Morris, Robert Noelke, E. Wayne Nordberg and John J. Walsh. The address of each
partner is The General Motors Building, 767 Fifth Avenue, New York, New York
10153-0203. Lord Abbett and COVA Life provided operating funds to the Fund
through their purchase of the initial shares of the Fund.
Lord Abbett acts as investment manager for twelve other investment companies
comprising the Lord Abbett family of funds. The names of these investment
companies are: Lord Abbett Affiliated Fund, Inc., Lord Abbett Bond-Debenture
Fund, Inc., Lord Abbett De veloping Growth Fund, Inc., Lord Abbett Global Fund,
Inc., Lord Abbett Mid-Cap Value Fund, Inc., Lord Abbett Tax-Free Income Fund,
Inc., Lord Abbett Tax-Free Income Trust, Lord Abbett Equity Fund, Lord Abbett
U.S. Government Securities Money Market Fund, Inc., Lord Abbett Securities
Trust, Lord Ab bett Investment Trust and Lord Abbett Research Fund, Inc.
The services to be provided by Lord Abbett are described under "Management" in
the Prospectus. Under the Management Agreement, the Fund on behalf of the
Portfolio is obligated to pay Lord Abbett a monthly fee, based on the average
daily net assets of the Portfolio for each month, at the annual rate of .50 of
1% with respect to the Portfolio. This fee is allocated between the Portfolio's
two classes based on each class's proportionate share of such daily net assets.
For the year ended December 31, 1993, Lord Abbett was paid an advisory fee of
$26 9,800 with respect to the Portfolio. For the year ended December 31, 1994,
Lord Abbett was paid an advisory fee of $518,190 with respect to the Portfolio.
For the year ended December 31, 1995, Lord Abbett was paid an advisory fee of
$704,093 with respect to the Portfolio.
The Fund pays all expenses not expressly assumed by Lord Abbett, including,
without limitation, outside directors' fees and expenses, association membership
dues, legal and auditing fees, taxes, transfer and dividend disbursing agent
fees, shareholder serv icing costs, expenses relating to shareholder meetings,
expenses of preparing, printing and mailing stock certificates and shareholder
reports, expenses of registering the Fund's shares under federal and state
securities laws, expenses of printing and mailing prospectuses to existing
shareholders, insurance premiums, brokerage and other expenses connected with
executing portfolio transactions.
Due to different investment objectives or other factors, a particular security
may be bought for one or more funds, portfolios or clients (for which Lord
Abbett or its affiliates offer investment advice) when one or more are selling
the same security. If opportunities for purchase or sale of securities by Lord
Abbett for the Fund or for other funds, portfolios or clients for which it
renders investment advice arise for consideration at or about the same time,
transactions in such securities will be made insofar as feasible for the
respective funds , portfolios or clients in a manner deemed equitable to all of
them. To the extent that transactions on behalf of more than one client of Lord
Abbett, or its affiliates may increase the demand for securities being purchased
or the supply of securities being sold, there may be an adverse effect on price.
Deloitte & Touche LLP, Two World Financial Plaza, New York, New York 10281 are
the independent auditors of the Fund and must be approved at least annually by
the Fund's Board of Directors to continue in such capacity. They perform audit
services for the F und including the examination of financial statements
included in the Fund's annual report to shareholders.
The Bank of New York ("BNY"), 40 Wall Street, New York, New York 10286, is the
Fund's custodian.
5.
Portfolio Transactions
The Fund's policy is to obtain best execution on all portfolio transactions,
which means that we seek to have purchases and sales of portfolio securities
executed at the most favorable prices, considering all costs of the transaction
including brokerage co mmissions and dealer markups and markdowns and taking
into account the full range and quality of the brokers' services. Consistent
with obtaining best execution, the Fund may pay, as described below, a higher
commission than some brokers might charge on the same transactions. The Fund's
policy wi th respect to best execution governs the selection of brokers or
dealers and the market in which the transaction is executed. To the extent
permitted by law, the Fund may, if considered advantageous, make a purchase from
or sale to another Lord Abbett-managed fund without the intervention of any b
roker-dealer.
The Fund selects broker-dealers on the basis of their professional capability
and the value and quality of their brokerage and research services. Normally,
for domestic assets, the selection is made by the Fund's traders who are
officers of the Fund and a lso are employees of Lord Abbett. The Fund's traders
do the trading as well for other accounts - investment companies (of which they
are also officers) and other investment clients - managed by Lord Abbett. They
are responsible for the negotiation of prices and commissions.
In the case of securities traded in the domestic over-the-counter markets, there
is generally no stated commission, but the price usually includes an undisclosed
commission or markup. Purchases from underwriters of newly-issued securities for
inclusion in the Fund's portfolios usually will include a concession paid to the
underwriter by the issuer and purchases from dealers serving as market makers
will include the spread between the bid and asked prices. When commissions are
negotiated, the Fund pays a commission rate that it believes is approp riate to
give maximum assurance that its brokers will provide the Fund, on a continuing
basis, the highest level of brokerage services available. While the Fund does
not always seek the lowest possible commission on particular trades, it believes
that its commission rates are in line with the rate s that many institutions
pay. The Fund's traders are authorized to pay brokerage commissions in excess of
those that other brokers might accept on the same transactions in recognition of
the value of the services performed by the executing brokers, viewed in terms of
either the particular transac tion or the overall responsibilities of Lord
Abbett with respect to the Fund and the other accounts they manage. Such
services include such factors as showing the Fund trading opportunities
including blocks, willingness and ability to take positions in securities,
knowledge of a particular securit y or market, proven ability to handle a
particular type of trade, confidential treatment, promptness and reliability.
Some of the Fund's brokers also provide research services at least some of which
are useful to Lord Abbett in their overall responsibilities with respect to the
Fund and the other accounts they manage. Research includes the furnishing of
analyses and reports concerning issuers, industries, securities, economic
factors and trends, portfolio strategy and the performance of accounts and
trading equipment and computer software packages, acquired from third-party
suppliers, that enable Lord Abbett to access various information bases. Such
services may be used by Lord Abbett in servicing all their accounts, and not all
of such services will necessarily be used by Lord Abbett in connection with
their management of the Fund; conversely, such services furnished in connection
with brokerage of other accounts managed by Lord Abbett may be used in
connection with their services to the Fund, and not all of such research will
necessarily be used by Lord Abbett in connection with their advisory services to
such other accounts.
The Fund has been advised by Lord Abbett that research services received from
brokers cannot be allocated to any particular account, are not a substitute for
Lord Abbett's services but are supplemental to their own research effort and,
when utilized, are s ubject to internal analysis before being incorporated by
Lord Abbett into their investment process. As a practical matter, it would not
be possible for Lord Abbett to generate all of the information presently
provided by brokers. While receipt of research services from brokerage firms has
not red uced Lord Abbett's normal research activities, the expenses of Lord
Abbett could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Fund to purchase or sell portfolio securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold the Fund's shares
through the sale of variable contracts may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as the Fund does, transactions will, to the extent practicable, be allocated
among all participating accounts in proportion to the amount of each order and
will be executed dail y until filled so that each account shares the average
price and commission cost of each day. Other clients who direct that their
brokerage business be placed with specific brokers or who invest through wrap
accounts introduced to Lord Abbett by certain brokers may not participate with
us in the b uying and selling of the same securities as described above. If
these clients wish to buy or sell the same security as we do, they may have
their transactions executed at times different from our transactions and thus
may not receive the same price or incur the same commission cost as we do.
The Fund will not seek "reciprocal" broker-dealer business (for the purpose of
applying commissions in whole or in part for the Fund's benefit or otherwise)
from broker-dealers as consideration for the direction to them of portfolio
business. However, the Fund may receive quotations and pricing services without
charge from broker-dealers selected on the basis of the Fund's policy described
above.
During the fiscal years ended December 31, 1995, 1994 and 1993, the total dollar
amounts of brokerage commissions paid by the Fund were $418,128, $285,241, and
$253,502, respectively.
6.
Net Asset Value of Fund Shares
Portfolio shares are sold and redeemed at a price equal to the shares net asset
value. Net asset value per share is determined as of the close of the New York
Stock Exchange on each day that the New York Stock Exchange is open for
business, which is Monda y through Friday, except for New Year's Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day, by dividing the Portfolio's total net assets
by the number of shares outstanding at the time of calculation. The Portfolio
will also calculate such price on each other day on which there is a sufficient
degree of trading in the Portfolio's securities such that the current net asset
value of the Portfolio's shares might be materially affected by changes in the
value of such Portfolio securities, but only if on any such day the Portfolio is
required to purchase or redeem shares. Total net assets are determined by adding
the total current value of Portfolio securities, cash, receivables, and other
assets and subtracting liabilities. Portfolio shares will be sold and redeemed
at the net asset value next determined after receipt of th e sales order or
request for redemption.
Valuation of Securities Held in the Portfolio
Securities in the Fund's Portfolio are valued at their market value as of the
close of the New York Stock Exchange. Securities that are listed on a securities
exchange are valued at their closing sales price on the day of the valuation.
Price valuations for listed securities are based on market quotations where the
security is primarily traded or, if not available, are valued at the mean of the
bid and asked prices on any valuation date. Unlisted securities in the Portfolio
are primarily valued based on their latest quoted bid price or, if such a price
is not available, are valued by a method determined by the Directors to
accurately reflect fair value. Money market instruments maturing in 60 days or
less are valued on the basis of amortized cost, which means that they are valued
at their acquisition cost to reflect a constant amortizatio n rate to maturity
of any premium or discount, rather than at current market value.
7.
Dividends and Distributions
It is the Fund's intention to distribute substantially all the net investment
income, if any, of the Portfolio. For dividend purposes, net investment income
of the Portfolio will consist of dividends and/or interest earned by the
Portfolio less the expens es of such Portfolio.
All net realized capital gains of the Fund, if any, are declared and distributed
annually to the shareholders of the Portfolio to which such gains are
attributable.
8.
Distribution Arrangements
General
Lord Abbett Distributor LLC, a subsidiary of Lord Abbett organized as a New York
limited liability company, serves as the distributor in connection with the
offering of the Fund's shares. Currently, only shares of the Growth and Income
Portfolio are offer ed for sale. In connection with the sale of its shares, the
Fund has authorized Lord Abbett to provide only such information and to make
only such statements and representations which are not materially misleading or
which are contained in Fund's then-current Prospectus or Statement of Additional
Information or shareholder reports in such financial and other statements which
are furnished to Lord Abbett by the Fund.
The Fund and Lord Abbett are parties to a Distribution Agreement that continues
in force until January 30, 1997. The Distribution Agreement may be terminated by
either party and will automatically terminate in the event of its assignment.
The Distribution Agreement may be renewed annually if speci fically approved by
the Board of Directors or by vote of a majority of the outstanding voting
securities of the Fund provided that any such renewal shall be approved by the
vote of a majority of the Directors who are not parties to the Distribution
Agreement and are not "interested persons" of the Fund and have no direct or
indirect financial interest in the operation of the Distribution Agreement.
Pension Class Rule 12b-1 Plan. As described in the Prospectus, the Fund has
adopted a Distribution Plan and Agreement pursuant to Rule 12b-1 of the Act for
the Pension Class (the "Plan"). In adopting the Plan and in approving its
continuance, the Board of Directors has concluded that there is a r easonable
likelihood that the Plan will benefit the Class and its shareholders. The
expected benefits include greater sales and lower redemptions of Class shares,
which should allow the Class to maintain a consistent cash flow, and a higher
quality of service to shareholders by authorized instituti ons than would
otherwise be the case. The Plan requires the directors to review, on a quarterly
basis, written reports of all amounts expended pursuant to the Plan and the
purposes for which such expenditures were made. The Plan shall continue in
effect only if its continuance is specifically appr oved at least annually by
vote of the directors, including a majority of the directors who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements related to the Plan
("outside directors"), cast in person at a me eting called for the purpose of
voting on the Plan. The Plan may not be amended to increase materially above the
limits set forth therein the amount spent for distribution expenses thereunder
without approval by a majority of the outstanding voting securities of the
applicable class and the approv al of a majority of the directors, including a
majority of the outside directors. The Plan may be terminated at any time by
vote of a majority of the outside directors or by vote of a majority of its
Class's outstanding voting securities.
9.
Taxes
The Fund intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, as amended. Under such provisions, the
Fund will not be subject to Federal income tax on that part of its net ordinary
income and net re alized capital gains which it distributes to shareholders. The
Portfolio will be treated as a separate entity for Federal income tax purposes
and, therefore, the investments and results of the Portfolio are determined
separately for purposes of determining whether the Fund qualifies as a regulated
investment company and for purposes of determining the Fund's net ordinary
income (or loss) and net realized capital gains (or losses). To qualify for
treatment as a regulated investment company, the Fund must, among other things,
derive in each taxable year at least 90% of its gross income from dividends,
interest and gains from the sale or other disposition of securities and certain
other related income and derive less than 30% of its gross income in each
taxable year from the gains (without deduction for losses) from the sale or
other disposition of securities (including, in certain cir cumstances, gains
from options, futures, forward contracts and foreign currencies) held for less
than three months.
10.
Calculation of Performance Data
The average annual compounded rate of return for each class of the Portfolio is
determined by reference to a hypothetical $1,000 investment that includes
capital appreciation and depreciation for the stated period, according to the
following formula: where P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1000 purchase at the end of
the period.
Aggregate total return is calculated in a similar manner, except that the
results are not annualized. Each calculation assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period.
Using this method to compute average annual compounded rates of total return for
the Portfolio, the Portfolio's last one, five and the life of the fund periods
ending on December 31, 1995 are: 29.80%, 17.60% and 14.86%, respectively. During
these periods the only class of shares of the Portfolio existing was offered
exclusively to insurance companies as the underlying investment for certain
variable annuity contracts. That class of shares is now called the Variable
Contract Class and the charges and expenses attributable to that class are
differen t from those attributable to the Pension Class, the only class of the
Portfolio offered by this Statement of Additional Information. For more
information, including a current Prospectus and Statement of Additional
Information, with respect to the Variable Contract Class and the variable
contracts associated with such class call 800-523-1661.
11.
Financial Statements
The financial statements for the fiscal year ended December 31, 1995 and the
opinion thereon of Deloitte & Touche LLP, independent auditors, included in the
1995 Annual Report to Shareholders of the Lord Abbett Series Fund, Inc., are
incorporated herein by reference in reliance upon the authority of Deloitte &
Touche LLP as experts in auditing and accounting.
<PAGE>
PART C OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The financial statements of the Fund for the fiscal year ended December 31, 1995
are included in the 1995 Annual Report to Shareholders and are incorporated by
reference in Part B hereof.
(b) Exhibits -
(1)(a) Articles Supplementary to Articles Incorporation of
Registrant*
(b) Articles of Amendment to Articles of Incorporation of
Registrant*
(2) By-Laws of Registrant***
(3) Not Applicable
(4) Not Applicable
(5) Management Agreement between Registrant and Lord,
Abbett & Co.****
(i) Sub-Investment Management Agreement#
(6) (a) Amended Form Of Fund's Distribution Agreement*
(b) Form of Addendum (with regard to the
Pension Class) to the Fund's Distribution Agreement*
(7) (a) Amended Form of Retirement Plan for Lord Abbett-
sponsored fund non interested Directors (Trustees)*
(b) Form of Equity Plans of for Non-Interested
Directors (Trustees) of Lord Abbett Funds*
(8) (i) Custody Agreement between Registrant and
The Bank of New York#
(ii) Form of Transfer Agency Agreement**
(9) Form of Fund Services Agreement with Merrill Lynch
Pierce,Fenner & Smith Incorporated*
(10) Opinion and Consent of Counsel***
(11) Consent of Independent Auditors*
(12) Not Applicable
(13) Form of Agreements Governing Contribution of
Capital**
(14) Not Applicable
(15) (a) Amended Form of Distribution Plan (with respect
to the Variable Contract Class) between
Registrant and Lord Abbett Distributor LLC*
(b) Form of Distribution Plan (with Respect to the
Pension Class) between Registrant and Lord
Abbett Distributor LLC*
(16) See "Calculation of Peformance Data" in Statement of
Additional Information
(17) Financial Data Schedule*
(18) Amended Form of Rule 18f-3 plan for Lord Abbett -
sponsored funds*
* Filed Herewith
** Incorporated by reference to Registrant's initial registration
on Form N-1A, filed on September 15, 1989.
<PAGE>
*** Incorporated by reference to Registrant's Pre-Effective
Amendment No. 1, filed on November 17, 1989.
**** Incorporated by reference to Registrant's Post-Effective
Amendment No.1, filed on April 2, 1990.
# Incorporated by reference to Registrant's Post-Effective
Amendment No.2, filed on April 22, 1991.
## Incorporated by reference to Registrant's Post-Effective
Amendment No.6, filed on April 28, 1994.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The shares of the Fund are currently sold only to Xerox Variable Annuity Account
One of Xerox Financial Services Life Insurance Company (the "Company").
The Company and Lord, Abbett & Co., (the Fund's Investment Manager) each made
initial capital contributions to the Fund and together own the majority of the
outstanding shares of the Fund.
Xerox Financial Services, Inc. ("XFS") and Xerox Credit Corp. ("XCC")
currently own 73.55% and 26.45% of the Company, respectively. XFS, a
Delaware corporation, is a wholly-owned subsidiary of Xerox Corporation,
a New York corporation. XCC, a Delaware corporation, is a wholly-owned
subsidiary of XFS. The Company's address is One Tower Lane, Suite
3000, Oakbrook Terrace, Illinois 60181-4644.
Lord, Abbett & Co. is a partnership located at The General Motors
Building, 767 Fifth Avenue, New York, New York 10153-0203. The ten
general partners of Lord, Abbett & Co., all of whom are officers and/or
directors of the Fund, are: Stephen I. Allen, Zane E. Brown, Daniel E.
Carper, Kenneth B. Cutler, Robert S. Dow, Daria L. Foster, Robert G.
Morris, Robert Noelke, E. Wayne Nordberg and John J. Walsh.
Item 26. NUMBER OF RECORD HOLDERS OF SECURITIES
Xerox Financial Services Life Insurance Company and its separate
account, Xerox Variable Annuity Account One, and Lord, Abbett & Co. are
the shareholders of the Fund.
Item 27. INDEMNIFICATION
Registrant is incorporated under the laws of the State of Maryland and is
subject to Section 2-418 of the Corporations and Associations Article of the
Annotated Code of the State of Maryland controlling the
<PAGE>
indemnification of directors and officers. Since Registrant has its executive
offices in the State of New York, and is qualified as a foreign corporation
doing business in such State, the persons covered by the foregoing statute may
also be entitled to and subject to the limitations of the indemnification
provisions of Sections 721-726 of the New York Business Corporation Law.
The general effect of these statutes is to protect officers, directors and
employees of Registrant against legal liability and expenses incurred by reason
of their positions with the Registrant. The statutes provide for indemnification
for liability for proceedings not brought on behalf of the corporation and for
those brought on behalf of the corporation, and in each case place conditions
under which indemnification will be permitted, including requirements that the
officer, director or employee acted in good faith. Under certain conditions,
payment of expenses in advance of final disposition may be permitted. The
By-Laws of Registrant, without limiting the authority of Registrant to indemnify
any of its officers, employees or agents to the extent consistent with
applicable law, make the indemnification of its directors mandatory subject only
to the conditions and limitations imposed by the above-mentioned Section 2-418
of Maryland Law and by the provisions of Section 17(h) of the Investment Company
Act of 1940 as interpreted and required to be implemented by SEC Release No.
IC-11330 of September 4, 1980.
In referring in its By-Laws to, and making indemnification of directors subject
to the conditions and limitations of, both Section 2-418 of the Maryland Law and
Section 17(h) of the Investment Company Act of 1940, Registrant intends that
conditions and limitations on the extent of the indemnification of directors
imposed by the provisions of either Section 2-418 or Section 17(h) shall apply
and that any inconsistency between the two will be resolved by applying the
provisions of said Section 17(h) if the condition or limitation imposed by
Section 17(h) is the more stringent. In referring in its By-Laws to SEC Release
No. IC-11330 as the source for interpretation and implementation of said Section
17(h), Registrant understands that it would be required under its By-Laws to use
reasonable and fair means in determining whether indemnification of a director
should be made and undertakes to use either (1) a final decision on the merits
by a court or other body before whom the proceeding was brought that the person
to be indemnified ("indemnitee") was not liable to Registrant or to its security
holders by reason of willful malfeasance, bad
<PAGE>
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his office ("disabling conduct") or (2) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that the
indemnitee was not liable by reason of such disabling conduct, by (a) the vote
of a majority of a quorum of directors who are neither "interested persons" (as
defined in the Investment Company Act of 1940) of Registrant nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion. Also,
Registrant will make advances of attorneys' fees or other expenses incurred by a
director in his defense only if (in addition to his undertaking to repay the
advance if he is not ultimately entitled to indemnification) (1) the indemnitee
provides a security for his undertaking, (2) Registrant shall be insured against
losses arising by reason of any lawful advances, or (3) a majority of a quorum
of the non-interested, non-party directors of Registrant, or an independent
legal counsel in a written opinion, shall determine, based on a review of
readily available facts, that there is reason to believe that the indemnitee
ultimately will be found entitled to indemnification.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
In addition, Registrant maintains a directors' and officers' errors and
omissions liability insurance policy protecting directors and officers against
liability for breach of duty, negligent act, error or omission committed in
their capacity as directors or officers. The policy contains certain exclusions,
among which is exclusion from coverage for active or deliberate dishonest or
fraudulent acts and exclusion for fines or penalties imposed by law or other
matters deemed uninsurable.
Finally, the Registrant's Articles of Incorporation provide that to the fullest
extent permitted by Maryland statutory or decisional law, as amended from time
to time, no director or officer of the Registrant shall be
<PAGE>
personally liable to the Registrant or its stockholders for money damages,
except to the extent such exemption from liability or limitation thereof is not
permitted by the Investment Company Act of 1940, as amended from time to time.
No amendment of these Articles or repeal of any of their provisions shall limit
or eliminate the benefits provided to directors and officers under this
provision with respect to any act or omission which occurred prior to such
amendment or repeal.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Lord, Abbett & Co. acts as investment adviser for thirteen other open-end
investment companies (of which it is the principal underwriter for twelve such
investment companies), and as investment adviser to approximately 5,100 private
accounts. Other than acting as directors and/or officers of open-end investment
companies sponsored by Lord, Abbett & Co., none of Lord, Abbett & Co.'s partners
has, in the past two fiscal years, engaged in any other business, profession,
vocation or employment of a substantial nature for his own account or in the
capacity of director, officer, employee, partner or trustee of any entity except
as follows:
John J. Walsh
Trustee
Brooklyn Hospital
Parkside Avenue
Brooklyn, N.Y.
Item 29. PRINCIPAL UNDERWRITER
(a) Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Tax-Free Income Trust
Lord Abbett Global Fund, Inc.
Lord Abbett Equity Fund
<PAGE>
Lord Abbett U.S. Government Securities
Money Market Fund, Inc.
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Lord Abbett Research Fund, Inc.
INVESTMENT ADVISOR
American Skandia Trust
(Lord Abbett Growth and Income Portfolio)
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address (1) with Registrant
Robert S. Dow Chairman & President
Kenneth B. Cutler Vice President &
Secretary
Stephen I. Allen Vice President
Zane E. Brown Vice President
Daniel E. Carper Vice President
Daria L. Foster Vice President
Robert G. Morris Vice President
Robert Noelke Vice President
E. Wayne Nordberg Vice President
John J. Walsh Vice President
(1) Each of the above has a principal business address of 767 Fifth Avenue,
New York, NY 10153-0203
(c) Not applicable
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Registrant maintains the records, required by Rules 31a-1(a) and (b), and
31a-2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules 31a-1(f) and
31a-2(e) at its main office.
<PAGE>
Certain records and correspondence may be physically maintained at the main
office of the Registrant's Transfer Agent, Custodian, or Shareholder Servicing
Agent within the requirements of Rule 31a-3.
Item 31. MANAGEMENT SERVICES
None
Item 32. UNDERTAKINGS
Registrant undertakes to furnish each person to whom a prospectus is delivered,
with a copy of the Registrant's latest annual report to share holders, upon
request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Registration Statement
and/or any amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on the
28th day of October, 1996.
LORD ABBETT SERIES FUND, INC.
By: /s/ ROBERT S. DOW
------------------------------------
Robert S. Dow, Chairman of the Board
and Director
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Chairman of the Board
/s/Robert S. Dow President and Director October 28, 1996
- ----------------------- ---------------------------- -----------
Robert S. Dow (Title) (Date)
Vice President and
/s/John J. Gargana, Jr. Chief Financial Officer October 28, 1996
- ----------------------- ---------------------------- ------------
John J. Gargana, Jr. (Title) (Date)
/s/E. Thayer Bigelow Director October 28, 1996
- ----------------------- ---------------------------- -----------
E. Thayer Bigelow (Title) (Date)
/s/Steward S. Dixon Director October 28, 1996
- ----------------------- ---------------------------- -----------
Steward S. Dixon (Title) (Date)
/s/John C. Jansing Director October 28, 1996
- ----------------------- ---------------------------- -----------
John C. Jansing (Title) (Date)
/s/C. Alan MacDonald Director October 28, 1996
- ----------------------- ---------------------------- ------------
C. Alan MacDonald (Title) (Date)
/s/ Hansel B. Millican, Jr. Director October 28, 1996
- ----------------------- ----------------------------- -----------
Hansel B. Millican, Jr. (Title) (Date)
/s/ Thomas J. Neff Director October 28, 1996
- ----------------------- ----------------------------- ------------
Thomas J. Neff (Title) (Date)
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
LORD ABBETT SERIES FUND, INC.
LORD ABBETT SERIES FUND, INC., a Maryland corporation, having
its principal office c/o The Prentice-Hall Corporation System, Maryland, 11 East
Chase Street, Baltimore, Maryland 21202 (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of
Maryland, that:
FIRST: The Corporation presently has authority to issue 1,000,000,000
Shares of capital stock, of the par value of $.001 each (the "Shares"), having
an aggregate par value of $1,000,000. The Shares presently constitute three
classes designated as the "Variable Contract Class" consisting of 50,000,000
Shares, the "Growth Class" consisting of 50,000,000 Shares, and the "Global
Equity Class" consisting of 50,000,000 Shares, with the remaining Shares being
unclassified. As provided in the Articles of Incorporation (hereafter called the
"Articles") of the Corporation, the term "Class," as used in these Articles
Supplementary, shall mean a separate and distinct class of Shares initially
provided for in the Articles or from time to time created by the Board of
Directors of the Corporation and the term "Series," as used in these Articles
Supplementary, shall mean a series of Shares to which any two or more Classes
are
<PAGE>
allocated by the Board of Directors.
SECOND: All Shares of a Class or of a Series shall represent the same
interest in the Corporation and have the same preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption as the other Shares of
that Class or Series, except to the extent that the Board of Directors provides
for differing preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of Shares of such Classes or such Series as determined
pursuant to the Articles, or as otherwise determined pursuant to these Articles
Supplementary or additional Articles Supplementary filed for record with the
State Department of Assessments and Taxation of Maryland, or by the Board of
Directors in accordance with law.
THIRD: Pursuant to the power and authority of the Board of Directors to
classify or reclassify unissued Shares from time to time, including the power
and authority to allocate Classes of Shares to Series of Shares, the Board of
Directors hereby further classifies the capital stock of the Corporation by (a)
classifying from previously unclassified Shares, 50,000,000 authorized but
unissued Shares as the "Pension Class," and (b) allocating the Variable Contract
Class and the Pension Class to a Series of Shares designated as the "Growth and
Income Portfolio" (the "Portfolio").
<PAGE>
FOURTH: Subject to the power of the Board of Directors to classify and
reclassify unissued shares, all Shares of the Pension Class and the Variable
Contract Class of the Portfolio shall be invested in the investment portfolio of
the Corporation, and shall have the same preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption set forth in Article V of
the Articles and shall be subject to all other provisions of the Articles
relating to stock of the Corporation generally and to the provisions of these
Articles Supplementary.
FIFTH: Liabilities and expenses relating solely to a particular Class
of the Portfolio (including, without limitation, distribution expenses under a
plan in effect adopted for such Class pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Act"), and administrative
expenses under an administration or service agreement, plan or other
arrangement, however designated, which may be adopted for such Class) shall be
allocated to and borne by such Class of the Portfolio to the extent determined
by the Board of Directors, and shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value, dividends and
distributions and liquidation rights of the Shares of such Class.
SIXTH: Dividends paid by the Corporation on each Class of Shares of the
Portfolio, to the extent any dividends are paid, will be calculated in the same
manner, will be paid at the same time, and will be in the same amount, except
that (a) any expenses allocated to a Class of the Portfolio, in the manner set
forth under these Articles
<PAGE>
Supplementary, shall be borne exclusively by that Class and (b) income, realized
and unrealized capital gains and losses and expense not allocated to a Class of
the Portfolio shall be allocated to each Class on the basis of the net asset
value of that Class in relation to the net asset value of the Portfolio.
SEVENTH: The net asset value of each Share of a Class of the Portfolio
shall be determined in accordance with the Articles with appropriate adjustments
to reflect the allocations of expenses, income, and realized and unrealized
capital gains and losses of the Portfolio between its Classes as provided above.
The assets belonging to each Class shall be combined and the assets belonging to
such Class shall be an undivided interest in such combined assets, the
percentage of which shall be determined from time to time on the basis of the
net asset value of that Class, in relation to the net asset value of the
Portfolio.
EIGHTH: Shares of the Pension Class of the Portfolio aforesaid have
been classified by the Board of Directors under the authority contained in
section 1 of Article V of the Articles.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Vice President and attested by its
Assistant Secretary on October __, 1996.
LORD ABBETT SERIES FUND, INC.
By /S/ KENNETH B. CUTLER
Vice President
ATTEST:
/S/ THOMAS F. KONOP
Assistant Secretary
<PAGE>
THE UNDERSIGNED, Vice President of LORD ABBETT SERIES FUND,
INC., who executed on behalf of said Corporation the foregoing Articles
Supplementary, of which this Certificate is made a part, hereby acknowledges, in
the name and on behalf of said Corporation, the foregoing Articles Supplementary
to be the corporate act of said Corporation and further certifies that, to the
best of his knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all material respects
under the penalties of perjury.
/S/ KENNETH B. CUTLER
Vice President
LORD ABBETT SERIES FUND, INC.
ARTICLES OF AMENDMENT
LORD ABBETT SERIES FUND, INC., a Maryland corporation (herein
after called the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland, that:
FIRST: The Articles of Incorporation of the Corporation (hereinafter called
the "Articles"), as heretofore amended, are hereby further amended by:
specifying the legal name for the existing Growth and Income Class of the
Corporation as the "Variable Contract Class".
SECOND: A majority of the entire Board of Directors of the Corporation on
October 16, 1996, duly adopted resolutions approving the foregoing amendment to
the Articles.
THIRD: The amendment of the Articles hereinabove set forth has
been duly approved by the Board of Directors of the Corporation and is limited
to a change expressly permitted by ss. 2-605 of the General Corporation Law of
the State of Maryland to be made without action of the stockholders.
FOURTH: The Corporation is registered as an open-end company under the
Investment Company Act of 1940, as amended from time to time.
<PAGE>
IN WITNESS WHEREOF, Lord Abbett Series Fund, Inc. has caused these presents
to be signed in its name and on its behalf by its President and witnessed by its
Secretary on __________, 1996.
LORD ABBETT SERIES FUND,
INC.
By: /S/ ROBERT S. DOW
President
WITNESS:
/S/ KENNETH B. CUTLER
Secretary
<PAGE>
THE UNDERSIGNED, President of Lord Abbett Series Fund, Inc.,
who executed on behalf of the Corporation the foregoing Articles of Amendment,
of which this Certificate is made a part, hereby acknowledges, in the name and
on behalf of said Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
/S/ ROBERT S. DOW
President
<PAGE>
DRAFT 10/25/96
DISTRIBUTION AGREEMENT
Agreement made this __ day of October 1996, between Lord Abbett Series Fund,
Inc., a diversified open-end management investment company incorporated under
the laws of Maryland (the "Fund"), and Lord Abbett Distributor LLC, a New York
limited liability company (the "Distributor"), each with offices at the General
Motors Building, 767 Fifth Avenue, New York, New York 10153-0203.
WHEREAS, the Fund currently offers shares of its common stock ("Shares") in one
Portfolio designated as the Growth & Income Portfolio (the "Current Portfolio"),
and the Fund may offer Shares of one or more additional portfolio's (each, an
"Additional Portfolio", and, together with the Current Portfolio, the
"Portfolios") in the future; and
WHEREAS, the Fund's Shares are and may be used as the funding vehicle for
certain variable annuity contracts and variable life insurance policies
(collectively referred to herein as "Variable Contracts") offered by life
insurance companies (each, a "Life Company", and, collectively, the "Life
Companies") through separate accounts of such Life Companies; and
WHEREAS, from time to time the Distributor may enter into Sales Agreements with
Life Companies that have or will establish one or more separate accounts to
offer Variable contracts, pursuant to which the Fund's Shares will serve as the
underlying funding vehicle for such Variable Contracts; and
WHEREAS, the Fund has adopted a distribution Plan (the "Plan") pursuant to
Section 12(b) of the Investment Company Act of 1940, as amended (the "1940
Act"), and Rule 12b-1 thereunder, pursuant to which the Fund may pay for certain
Distribution Expenses (as defined in the Plan) incurred or paid by the Life
Companies;
NOW THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
1.(a) The Fund proposes to issues and sell Shares of the portfolios to separate
accounts of Life Companies to the extent permitted by applicable law. The fund
hereby appoints the Distributor as its exclusive selling agent to sell the
Shares, and the Distributor hereby accepts such appointment. The Shares will be
distributed under such terms as are set by the Fund and will be sold to separate
accounts of such Life Companies as may from time to time be approved by the
Board of Directors.
(b) In the event that the fund proposes to sell Shares of one or more of
Additional Portfolios, it shall notify the Distributor in writing and the Fund
and the Distributor shall enter into and Addendum to this Agreement for the
Additional portfolios and the Additional portfolios shall be subject to this
Agreement.
<PAGE>
2. The Distributor agrees that (i) all Shares sold by the Distributor shall be
sold at the net asset value thereof determined as provided in the Fund's
Articles of Incorporation, as the same may be amended from time to time and (ii)
the Fund shall receive 100% of such net asset value. All orders for Shares sold
to Life Companies by the distributor shall be transmitted to the Fund for
acceptance at its office in New York.
3. All Fund sales literature and advertisements used by the distributor in
connection with the sales of Shares shall be filed with the appropriate
authorities, including the National association of Securities Dealers, Inc., the
states, jurisdictions, and/or the Securities and Exchange Commission as may be
required from time to time. The Fund authorizes the Distributor, in connection
with the sale or arranging for the sale of Shares, to provide only such
information and to make only such statements or representations which are not
materially misleading or which are contained in the Fund's then-current
Prospectus or Statement of Additional Information or shareholder reports or in
such financial and other statements which are furnished to the Distributor by
the Fund. The Fund shall not be responsible in any way for any information
provided or statements or representations made by the Distributor or its
representatives or agents other than the information, statements and
representations furnished by the Fund and described in the preceding sentence.
The Distributor shall review all materials submitted to it by the life Companies
that describe the Fund, the Shares or the Distributor. The Distributor shall not
be responsible for any information provided or statements or representations
made by the Life Companies, representatives or agents of the Life Companies or
any other persons or entities other than the Distributor's representatives or
agents.
4.(a) The Fund will pay or cause to be paid the fees, costs, expenses or other
charges of any of its portfolios as set forth in the Management Agreement
between the Fund and Lord Abbett LLC, as the same be amended from time to time.
(b) The Distributor shall pay all of the costs and expenses incurred by its
connection with the offer and sale of the Shares of any Portfolio, provided,
however, that Distribution Expenses payable by the Fund as provided in paragraph
(c) hereof shall not be deemed to be costs and expenses incurred by the
Distributor. If the Distributor pays for other expenses of the Fund or furnishes
the Fund with services, the cost of which is to be borne by the Fund under this
Agreement, the distributor shall not be deemed to have waived its rights under
this Agreement to have the Fund pay for such services in the future.
(c) The Fund may pay amounts of Distribution Expenses to the Distributor for
remittance to a Life Company that has entered into a Sales Agreement with the
Distributor, with respect to the Current Portfolio and with respect to each
Additional Portfolio that may adopt the Plan, as the same may be amended from
time to time. Any such Distribution Expenses shall be payable in accordance
with, and subject to compliance by the Distributor and the Fund with the
provisions of, the Plan. The Distributor shall remit as promptly as reasonably
practicable all payments received from the Fund pursuant to the Plan to the
respective Life Companies having incurred or paid such Distribution Expenses.
5. Neither this Assignment nor any other transaction between the parties hereto
pursuant to this Agreement shall be invalidated or in any way affected by the
fact that any or all of the
<PAGE>
directors, officers, stockholders, or other representatives of the Fund are or
may be interested in the Distributor, or any successor or assignee thereof, or
that any or all of the directors, officers, partners, or other representatives
of the distributor are or may be interested in the fund, except as otherwise may
be provided in the 1940 Act.
6. The Distributor agrees that it will not sell for its own account to the Fund
any stocks, bonds or other securities of any kind or character, except that if
it shall own any of the Fund's Shares or other securities, it may sell them to
the Fund on the same terms as any other shareholder might do.
7. The Distributor agrees that it will shall observe and be bound by all of the
terms of the Articles of Incorporation of the Fund, including any amendments
thereto, which shall in any way limit or restrict or prohibit or otherwise
regulate any action of the Distributor.
8.(a) This Agreement shall continue in force until January 30, 1995, and it may
be continued annually thereafter by specific approval of the Board of Directors
of the Fund or by vote of a majority of the outstanding voting securities of the
Fund; any such renewal shall be approved by the vote of majority of the
directors who are not parties to this Agreement and are not "interested persons"
of the Fund and have no direct or indirect financial interest in the operation
of this Agreement (the "Independent Directors"), cast in person at a meeting
called for the purpose of voting on such renewal.
(b) This Agreement, with respect to any Portfolio, may be terminated at any time
without payment of any penalty, by vote of a majority of the Independent
Directors or by vote of a majority of the outstanding voting securities of that
Portfolio on not more than 60 days written notice to the Distributor.
(c) This Agreement shall automatically terminate in the event of its assignment.
(d) The terms "interested person", "assignment" and "vote of a majority of the
outstanding voting securities" as used herein shall have the meaning given to
them in the 1940 Act.
9. Other than to abide by the provisions hereof and render the services called
for hereunder in good faith, the Distributor assumes no responsibility under
this Agreement and having so acted, the Distributor shall not be held liable or
held accountable for any mistake of law or fact, or for any loss or damage
arising or resulting therefrom suffered by the Fund or any of the stockholders,
creditors, directors, or officers of the Fund; provided, however, that nothing
herein shall be deemed to protect the Distributor against any liability to the
Fund or its shareholders by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder, or by reason of the
reckless disregard of its obligations and duties hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed by their duly authorized officers on the day and year first
above written.
LORD ABBETT SERIES FUND, INC.
By:
Chairman
Attest:
Secretary
LORD, ABBETT & CO.
By:
Partner
<PAGE>
ADDENDUM TO draft 10/25/96
DISTRIBUTION AGREEMENT
AGREEMENT made this ____ day of October, 1996 by and between LORD ABBETT
SERIES FUND, INC. a Maryland Corporation (hereinafter called the "Fund"), and
LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (hereinafter
called the "Distributor") to serve as an addendum (the "Addendum") to the
Distribution Agreement, dated October ___, 1996, between the Fund and the
Distributor (the "Distribution Agreement").
WHEREAS, the Fund and the Distributor entered into the Distribution
Agreement primarily to cover shares of the Fund offered to life insurance
companies as the funding vehicle for certain variable annuity contracts and
variable life insurance policies (collectively referred to "Variable
Contracts"); and
WHEREAS, the Board of Directors has subsequently been authorized by Fund
shareholders to allocate classes of the Fund's shares to series of the Fund, as
described in the Fund's proxy material for a special meeting of shareholders
held on December 21, 1994; and
WHEREAS, the Fund desires to amend the Distribution Agreement to authorize
the Distributor to find purchasers for its securities (which may be issued in
various Series and in various classes of such Series) in a manner similar to the
Distributor's current arrangements (not involving Variable Contracts) with other
funds in the Lord Abbett family of funds.
NOW, THEREFORE, in consideration of the mutual covenants and of other good
1
<PAGE>
and valuable consideration, receipt of which is hereby acknowledged, it is
agreed as follows:
1. The Fund hereby appoints the Distributor its exclusive selling agent for
the sale of its shares of beneficial interest, of all Series and all classes
thereof, and all other securities now or hereafter created or issued by the Fund
(except (i) notes and other evidences of indebtedness issued for borrowed money
and (ii) securities of the Fund covered by the Distribution Agreement with
respect to Variable Contracts), pursuant to paragraph 2 of this Addendum, and
the Fund agrees to issue its shares of beneficial interest or other securities,
subject to the provisions of its Articles of Incorporation, to purchasers
thereof and against payment of the consideration to be received by the Fund
therefor. The Distributor may appoint one or more investment professionals, such
as independent broker-dealers and the Distributor or any such broker-dealer may
transmit orders to the Fund for acceptance at its office in New York. Such
shares shall be registered in such name or names and amounts as the Distributor
or any such broker-dealer may request from time to time, and all shares when so
paid for and issued shall be fully paid and non-assessable.
2. The Distributor will act as exclusive selling agent for the Fund in
selling shares of beneficial interest of the Fund.
The Distributor agrees to sell exclusively through investment
professionals, such as independent broker-dealers and agrees to use its best
efforts to find purchasers for shares of beneficial interest of the Fund to be
offered; provided however, that the services of the Distributor under this
Addendum are not deemed to be exclusive, and nothing in this Addendum shall
prevent Distributor, or any officer, partner or employee thereof, from providing
similar services to other investment companies and other clients or to engage in
other activities.
The sales charge or premium, if any, relating to each Series and class of
shares
2
<PAGE>
of beneficial interest of the Fund shall be determined by the Board of Directors
of the Fund, but in no event shall the sales charge (front-end and/or
asset-based) and service fees exceed the maximum rate permitted under Federal
and state regulations and the rules of National Association of Securities
Dealers, Inc., and the amount to be retained by the Fund on any sale of its
shares shall in each case be the net asset value thereof (determined as provided
in the Articles of Incorporation). If a front-end sales charge is imposed from
the premium, the Fund agrees to pay the Distributor a sales commission. If
appropriate, the Distributor may allow concessions from such sales commissions.
In such event the amount of the payment hereunder by the Fund to the Distributor
shall be the difference between the sales commission and any concessions which
have been allowed in accordance herewith. If a front-end sales charge is
imposed, the sales commission payable to the Distributor shall not exceed the
front-end sales charge. If the Fund adopts a Distribution Plan under Rule 12b-1
of the Investment Company Act of 1940, the Fund and the Distributor may arrange
for payment of a distribution fee to investment professionals, such as
independent broker-dealers and/or payment to the Distributor for its
distribution expenses, in whole or in part.
Recognizing the need for providing an incentive to sell and providing
necessary and continuing informational and investment services to shareholders
of the Fund, the Fund or the Distributor (by agreement) may pay investment
professionals, such as independent broker dealers periodic servicing and sales
distribution fees based on percentages of average annual net asset value of
shareholder accounts.
3. Notwithstanding anything herein to the contrary, sales and distributions
of shares of beneficial interest of the Fund's beneficial shares may be made
upon the following special terms:
3
<PAGE>
(a) Capital gains distributions and income dividends on
shares of the Fund may be reinvested by shareholders
at net asset value without any sales commission.
(b) Shares may be issued by the Fund at net asset value
without any sales commission in connection with any
permitted offers of exchange between investment
companies having the same Distributor.
(c) Shares may be issued by the Fund at net asset value
without a sales commission or at a reduced sales
commission or back-end sales charge and with, or
without, a service fee as may from time to time be
permitted by rules or orders of the Securities and
Exchange Commission under the Investment Company Act
of 1940 and the rules of National Association of
Securities Dealers, Inc.
4. The investment professionals, such as independent broker-dealers who
sell the Fund's shares may also render other services to the Fund, such as
executing purchases and sales of portfolio securities, providing statistical
information, transfer and servicing agent services, and similar services. The
receipt of compensation for such other services shall in no way reduce the
amount of the sales commissions payable hereunder by the Fund to the Distributor
or the amount of the commissions, concessions or fees allowed.
5. The Distributor agrees to act as agent of the Fund in connection with
the repurchase of shares of beneficial interest of the Fund, or in connection
with permitted exchanges of shares between investment companies having the same
Distributor, and the Fund agrees to advise the Distributor of the net asset
value of its shares as frequently as may be mutually agreed, and to
4
<PAGE>
accept shares duly tendered to the Distributor. The net asset value shall be
determined as provided in the Articles of Incorporation of the Fund.
6. The Fund will pay all fees, costs, expenses and charges in connection
with the issuance, federal registration, transfer, redemption and repurchase of
its shares, including without limitation, all fees, costs, expenses and charges
of transfer agents and registrars, all taxes and other Governmental charges, the
costs of qualifying or continuing the qualifications of the Fund as
broker-dealer, if required, and of registering the Fund's shares under the state
blue sky laws, or similar laws of any jurisdiction (domestic or foreign), costs
of preparation and mailing prospectuses to its shareholders, and any other cost,
expense or charge not expressly assumed by the Distributor hereunder. The Fund
will also furnish to the Distributor daily such information as may reasonably be
requested by the Distributor in order that it may know all of the facts
necessary to sell the Fund's shares.
7. The Distributor agrees to pay the cost of all sales literature and other
material which it may require or think desirable to use in connection with sale
of such shares, including the cost of reproducing the offering prospectus
furnished to it by the Fund. The Fund agrees to use its best efforts to qualify
its shares for sale under the laws of such states of the United States and such
other jurisdictions (domestic or foreign) as the Distributor may reasonably
request.
If the Distributor pays for other expenses of the Fund or furnishes the
Fund with services, the cost of which is to be borne by the Fund under this
Addendum, the Distributor shall not be deemed to have waived its rights under
this Addendum to have the Fund pay for such expenses or provide such services in
the future.
8. The Distributor agrees to use its best efforts to find purchasers for
shares of
5
<PAGE>
each Series and class of such Series of the Fund issued and to make reasonable
efforts to sell the same so long as in the judgment of the Distributor a
substantial distribution can be obtained by reasonable efforts. The Distributor
is not authorized to act otherwise than in accordance with applicable laws.
9. Neither this Addendum nor any other transaction between the parties
hereto pursuant to this Addendum shall be invalidated or in any way affected by
the fact that any or all of the directors, officers, shareholders, or other
representatives of the Fund are or may be interested in the Distributor, or any
successor or assignee thereof, or that any or all of the directors, officers,
partners, or other representatives of the Distributor are or may be interested
in the Fund, except as otherwise may be provided in the Investment Company Act
of 1940.
10. The Distributor agrees that it will not sell for its own account to the
Fund any stocks, bonds or other securities of any kind or character, except that
if it shall own any of the Fund's shares or other securities, it may sell them
to the Fund on the same terms as any other holder might do.
11. Other than to abide by the provisions hereof and render the services
called for hereunder in good faith, the Distributor assumes no responsibility
under this Addendum and, having so acted, the Distributor shall not be held
liable or held accountable for any mistake of law or fact, or for any loss or
damage arising or resulting therefrom suffered by the Fund or any of the
shareholders, creditors, directors, or officers of the Fund; provided, however,
that nothing herein shall be deemed to protect the Distributor against any
liability to the Fund or its shareholders by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties hereunder, or by
reason of the reckless disregard of its obligations and duties hereunder.
6
<PAGE>
12. The Distributor agrees that it shall observe and be bound by all of the
terms of the Articles of Incorporation of Fund, including any amendments
thereto, of the Fund which shall in any way limit or restrict or prohibit or
otherwise regulate any action of the Distributor.
13. This Addendum shall continue in force until January 30, 1996 as part of
the Distribution Agreement, and it is renewable annually as part of the
Distribution Agreement thereafter by specific approval of the directors of the
Fund or by vote of a majority of the outstanding voting securities of the Fund;
any such renewal shall be approved by the vote of a majority of the directors
who are not parties to this Addendum or interested persons of the Distributor or
of the Fund, cast in person at a meeting called for the purpose of voting on
such renewal.
This Addendum may be terminated without penalty at any time by the Board of
Directors of the Fund or by vote of a majority of the outstanding voting
securities of a Series or class the Fund on 60 days' written notice with respect
to such Series or class. This Plan shall automatically terminate in the event of
its assignment. The terms "interested persons", "assignment" and "vote of a
majority of the outstanding voting securities" shall have the same meaning as
those terms are defined in the InvIestment Company Act of 1940.
7
<PAGE>
IN WITNESS WHEREOF, the Fund has caused this Addendum to be executed by its
duly authorized officers and its seal to be affixed thereto, and the Distributor
has caused this Addendum to be executed by one of its partners all on the day
and year first above written.
LORD ABBETT SERIES FUND, INC.
By:/s/ Robert S. Dow
Chairman of the Board
Attest:
/s/ Thomas F. Konop
Assistant Secretary
LORD ABBETT DISTRIBUTORS LLC
By: LORD, ABBETT & CO
Managing Member
By:/s/ Kenneth B. Cutler
A Partner
8
DRAFT--October 28, 1996
EX.7a
RETIREMENT PLAN FOR
NON-INTERESTED PERSON DIRECTORS
AND TRUSTEES OF LORD ABBETT FUNDS (As
Amended and Restated as of September 1, 1996)
ARTICLE I.
PURPOSE OF THE PLAN
SECTION 1.1 The Retirement Plan for Non-Inter ested Person
Directors and Trustees of Lord Abbett Funds (the "Plan") is established by the
Adopting Funds to attract and retain Independent Board Members by providing such
members with retirement income upon the terms and conditions set forth in the
Plan.
ARTICLE II.
DEFINITIONS
SECTION 2.1 Whenever used herein, unless the context indicates
otherwise, the following terms shall have the respective meanings set forth
below:
ACTUARIAL EQUIVALENT: A benefit having the actuarial
equivalent value to the benefit from which it is derived using the actuarial
assumptions set forth on Schedule A.
ADOPTING FUND: Each investment company referred to on Schedule
B that has adopted the Plan for its Inde pendent Board Members and any
investment company sponsored and managed by Lord Abbett that adopts the Plan
after the Effective Date as provided in Article VII of the Plan.
ANNUAL RETAINER FEE: The annual fee payable to
an
Independent Board Member by an Adopting Fund for serving as
an Independent Board Member, excluding any fees relating to
attending meetings or chairing committees.
DISABILITY: Permanent and total disability as
defined in Section 22(e)(3) of the Internal Revenue Code of
1986, as amended.
EARLY RETIREMENT BENEFIT: The benefit calculated
under Section 4.2 of the Plan.
EFFECTIVE DATE: August 13, 1992.
<PAGE>
ELIGIBLE BOARD MEMBER: An Independent Board
Member who satisfies the eligibility requirements set forth
in Article III of the Plan.
INDEPENDENT BOARD MEMBER: Any director (if the Adopting Fund
is a corporation) or any trustee (if the Adopting Fund is a trust) of an
Adopting Fund who is not an interested person (as such term is defined in the
Investment Company Act of 1940, as amended) of the Adopting Fund.
LORD ABBETT: Lord, Abbett & Co., the investment
adviser to each Adopting Fund.
NORMAL RETIREMENT BENEFIT: The benefit
calculated
under Section 4.1 of the Plan.
NORMAL RETIREMENT DATE: The last day of the calendar month in
which an Eligible Board Member attains age 72, PROVIDED that the Normal
Retirement Date for an Eligible Board Member who has attained age 72 prior to
the Effective Date shall be the first anniversary of the Effective Date or such
earlier date as shall be determined by the other Independent Board Members.
RETIREMENT: Any termination of service of an Eligible Board
Member of an Adopting Fund other than by reason of death (I) after attaining his
Normal Retirement Date or (II) which is approved by the Board of Directors or
Trustees of such Adopting Fund pursuant to Section 4.2.
YEAR OF SERVICE: Each twelve months of service as an
Independent Board Member of any Adopting Fund, commencing on the date the
Independent Board Member is elected as a director or trustee of such Adopting
Fund, regardless of whether such service is performed prior to the Effective
Date or prior to the time the Adopting Fund becomes an Adopting Fund hereunder.
Nothing in the preceding sentence shall be construed to provide any Independent
Board Member with credit for more than one Year of Service for any twelve month
period during which such Independent Board Member serves on the Boards of more
than one Adopting Fund.
<PAGE>
ARTICLE III.
ELIGIBILITY
Each Independent Board Member who was serving as such on
September 1, 1996, who does not make an election by the close of business on
November 29, 1996 to receive benefits under the Deferred Compensation Plans of
the Funds in lieu of retirement benefits under the Plan and who has completed at
least ten Years of Service as an Independent Board Member will be eligible to
receive retirement benefits under the Plan as provided in Article IV.
ARTICLE IV.
RETIREMENT BENEFIT
SECTION 4.1 NORMAL RETIREMENT BENEFIT. An Eligible Board
Member whose Retirement occurs on or after his Normal Retirement Date will
receive from each Adopting Fund which he served as an Independent Board Member
at the time of such Retirement an annual benefit payable for the remainder of
his life in an amount equal to 100% of the Annual Retainer Fee in effect on the
date of the Eligible Board Member's Retirement.
SECTION 4.2 EARLY RETIREMENT BENEFIT. If, in its sole
discretion, the Board of Directors or Trustees of an Adopting Fund on which an
Eligible Board Member serves determines that an Eligible Board Member has "good
cause" to retire prior to his Normal Retirement Date, the Eligible Board
Member's termination of service shall be treated as a Retirement and he shall
receive an Early Retirement Benefit calculated as provided in this Section 4.2.
The Early Retirement Benefit shall be an annual benefit payable for the
remainder of the Eligible Board Member's life which is the Actuarial Equivalent
of the Eligible Board Member's Normal Retirement Benefit. Good cause may include
(but is not limited to) the Disability of the Eligible Board Member or personal
circumstances making it impractical for the Eligible Board Member to continue as
an Independent Board Member.
SECTION 4.3 SPOUSAL BENEFIT. An Eligible Board Member may
elect prior to his Retirement to receive a reduced Normal Retirement Benefit or
Early Retirement Benefit, as the case may be, for his life and to provide a
survivor benefit to his surviving spouse, if any, for her life equal to the
percentage (not greater than 100%) of his reduced annual benefit specified in
his election. If an
<PAGE>
Eligible Board Member elects a survivor benefit, but does not specify the
percentage of his reduced benefit to be payable to his spouse, such spousal
benefit shall be 50% of his reduced annual benefit. In the event that an
Eligible Board Member elects a survivor benefit, the annual benefits payable in
respect of the Eligible Board Member and his spouse shall be equal to the
Actuarial Equivalent of the annual benefit which would have been payable to such
Member on a straight life basis.
SECTION 4.4 PRE-RETIREMENT DEATH BENEFIT. In
----------- ----------------------------
the
event an Eligible Board Member dies prior to Retirement,
such Member's surviving spouse, if any, shall receive a
spousal death benefit for the spouse's life calculated and
payable as provided in this Section 4.4. The benefit
payable to a surviving spouse hereunder shall be calculated
and payable at the same time and in the same manner as a
survivor benefit under Section 4.3 assuming that the
Eligible Board Member survived until his Normal Retirement
Date, elected a survivor benefit under Section 4.3 equal to
50% of his reduced annual benefit and commenced receipt of
his reduced benefit prior to his death; provided, however,
that the surviving spouse may elect, within 90 days of the
date of the Eligible Board Member's death, that the spousal
benefit be paid as though the Independent Board Member had
retired pursuant to Section 4.2 (with a reduced benefit)
immediately prior to his death.
ARTICLE V.
TIME OF PAYMENT
Any benefit payable under Article IV shall be payable
quarterly.
ARTICLE VI.
PAYMENT OF BENEFIT; ALLOCATION OF COSTS
Each Adopting Fund is responsible for the payment of the
benefits payable by it and the Adopting Funds are responsible for the payment of
all expenses of administration of the Plan, including without limitation all
accounting, legal fees and other Plan expenses. The Adopting Funds shall from
time to time agree as to the manner in which the expenses of the Plan shall be
allocated among the respective Adopting Funds. The obligations of each Adopting
Fund to pay benefits and such expenses will not be secured or funded in any
manner, and such obligations
<PAGE>
will not have any preference over the lawful claims of each Adopting Fund's
creditors or shareholders, as the case may be.
ARTICLE VII.
ADMINISTRATION
Any question involving entitlement to payments under, or the
administration of, the Plan will be referred to the Board of Directors or the
Board of Trustees of the Adopting Fund or Funds that are affected. Except as
otherwise provided herein, the Board of Directors or Board of Trustees of each
Adopting Fund will make all interpreta tions and determinations necessary or
desirable for the Plan's administration with respect to such Adopting Fund, and
such interpretations and determinations will be final and conclusive.
ARTICLE VIII.
MISCELLANEOUS AND TRANSITION PROVISIONS
8.1 RIGHTS NOT ASSIGNABLE. The right to receive any payment
under the Plan is not transferable or assignable. Except as provided in Sections
4.3 and 4.4, nothing in the Plan shall create any benefit, cause of action,
right of sale, transfer, assignment, pledge, encumbrance, or other such right in
any spouse or heirs or the estate of any Independent Board Member or former
Independent Board Member.
8.2 AMENDMENT, ETC. The Board of Directors or Board of
Trustees of an Adopting Fund may amend or terminate the Plan at any time with
respect to such Adopting Fund, PROVIDED that no amendment or termination will
impair the rights of an Eligible Board Member to receive upon Retirement the
payments which would have been made to such Board Member had there been no such
amendment or termination (based upon such Board Member's Years of Service to,
and the Annual Retainer Fee payable at, the date of such amendment or
termination) or the rights of an Eligible Board Member to receive any benefits
due under the Plan, without the consent of such Eligible Board Member. Any
investment company sponsored and managed by Lord Abbett may become an Adopting
Fund by adopting the Plan after the Effective Date.
<PAGE>
8.3 NO RIGHT TO REELECTION. Nothing in the Plan
will create any obligation on the part of any Adopting Fund
to nominate any Independent Board Member for reelection.
8.4 CONSULTING. After Retirement, each Eligible Board Member
may render such services for any Adopting Fund for such compensation as may be
agreed upon from time to time by such Eligible Board Member and such Adopting
Fund.
8.5 RETIREMENT POLICY. It shall be the policy
of
each Adopting Fund that each Independent Board Member shall
retire on his Normal Retirement Date.
<PAGE>
Schedule A
Actuarial Assumptions to
DETERMINE ACTUARIAL EQUIVALENT
Discount Rate: The interest rate in effect on January
1 of the then current year for use by
the Pension Benefit Guaranty
Corporation ("PBGC") to determine the
present value of lump sum
distributions on plan terminations
Mortality Rates: PBGC mortality tables then in effect
Other Factors: As determined by the actuary
calculating the amount of such benefit
using reasonable methods consistent
with customary actuarial practices
<PAGE>
Schedule B
Funds Adopting the Retirement Plan
for Non-Interested Person Directors
AND TRUSTEES OF LORD ABBETT FUNDS
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Affiliated Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Series Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Lord Abbett Research Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Tax-Free Income Trust
Lord Abbett U.S. Government Securities Money
Market Fund, Inc.
<PAGE>
ex. 7b
DRAFT--October 28, 1996
EQUITY-BASED PLANS FOR NON-INTERESTED
FORM OF DIRECTORS AND TRUSTEES OF LORD ABBETT FUNDS
1. PURPOSE.
The purpose of these Equity-Based Plans for Non- Interested
Person Directors and Trustees (collectively, the "Equity-Based Plans" and
separately, an "Equity-Based Plan"), which were initially called the Deferred
Compensation Plan for Non-Interested Person Directors and Trustees of Lord
Abbett Funds, is to provide eligible directors and trustees of each investment
company referred to on Schedule I that has adopted an Equity-Based Plan and any
other investment company sponsored and managed by Lord, Abbett & Co. that adopts
an Equity-Based Plan (collectively, the "Companies" and separately, a "Company")
with the opportunity to defer the receipt of compensation earned by them as
directors and trustees in lieu of receiving payment of such compensation
currently and to give them to the extent of such deferred compensation and other
compensation a pecuniary interest in the investment performance of the
Companies. The Plans constitute a separate Plan of each Company.
2. ELIGIBILITY.
Any member of the Board of Trustees (if a Company
is a trust) and any member of the Board of Directors (if a
<PAGE>
Company is a corporation) of a Company (the "Board") who is not an "interested
person" of such Company as such term is defined in the Investment Company Act of
1940 (an "Independent Board Member") shall be eligible to participate in the
Plan of such Company. 3. AMOUNTS OF DEFERRALS.
(a) ACCRUED PENSION PLAN DEFERRALS. The "Retirement Plan for
Non-Interested Person Directors and Trustees of Lord Abbett Funds" (the "Pension
Plan") has been amended, effective October 16, 1996, to provide that Independent
Board Members may elect to receive equity-based benefits under the Equity-Based
Plans in lieu of retirement benefits under the Pension Plan. Any Independent
Board Member who makes such an election by the close of business on November 29,
1996 shall not be entitled to retirement benefits under the Pension Plan, but
shall have his Account (as defined in section 4) for each Company increased, as
of the November 29, 1996, through credit of an amount equal to the value of such
Independent Board Member's retirement benefits under such Company's Pension Plan
(prior to giving effect to such amendment) as accrued to such date on the books
and records of such Company.
(b) MANDATORY DEFERRALS. Each Independent Board
Member who makes the election referred to in the foregoing
section 3(a) by the close of business on November 29, 1996,
<PAGE>
and each Independent Board Member who becomes an Independent Board Member after
such date, shall defer receipt of such amount, if any, of the compensation
earned by such Independent Board Member for serving as a member of the Board or
as a member of any committee (or subcommittee of such committee) of the Board of
which such Independent Board Member from time to time may be a member as may be
specified with respect to such Independent Board Member from time to time by
resolution of the Independent Board Members.
(c) OPTIONAL DEFERRALS. In addition to the above
deferrals an Independent Board Member may elect to defer
receipt of all or a specified portion of any other
compensation (including fees for attending meetings) earned
by such Independent Board Member by notice to the Companies.
Expenses of attending meetings of the Board, committees of
the Board or subcommittees of such committees may not be
deferred.
4. EQUITY-BASED ACCOUNTS.
A deferred compensation equity-based account (the "Account")
shall be established by each Company in the name of each Independent Board
Member. Any amounts credited to an Account pursuant to section 3(a) will be
credited as of the close of business on November 29, 1996. Any compensation
earned by an Independent Board Member during any year and deferred pursuant to
section 3(b) will be
<PAGE>
credited to such Independent Board Member's Account on a quarterly basis on the
last days of March, June, September and December of such year. Any compensation
deferred by an Independent Board Member pursuant to section 3(c) will be
credited to such Independent Board Member's Account on the date such
compensation otherwise would have been payable to such Independent Board Member.
5. ACCOUNT INVESTMENT.
(a) TREATMENT OF CREDIT AMOUNTS. Any amounts credited at any
time to an Independent Board Member's Account established by a Company shall be
deemed invested in a number of shares, which shall be class A shares if such
Company has multiple classes of shares, of such Company's Common Stock equal to
the quotient of (i) the amount credited to the Independent Board Member's
Account divided by (ii) the Net Asset Value per share as of the date such amount
is so credited. The Net Asset Value per share shall be determined as set forth
in the Company's Articles of Incorporation. If such Company has more than one
series, the amount credited to the Independent Board Member's Account shall be
allocated between or among the series on the same basis as the compensation
being deferred is charged to the series (or, in the case of an amount credited
pursuant to section 3(a), on the same basis as the amount thereof was charged to
the series).
<PAGE>
(b) MERGERS, ETC. In the event that the Company shall pay a
stock dividend on, or split up, combine, reclassify or substitute other
securities by merger, consolidation or otherwise for its outstanding shares, the
number of shares credited to the Independent Board Member's Account shall be
adjusted to preserve rights substantially proportionate to the rights held
immediately prior to such event.
(c) DISTRIBUTIONS. On each payable date of a
dividend or capital gains distribution declared by the Board
of a Company, the Account will be credited with the number
of full and fractional shares of the Company or series that
the shares of such Company or series deemed to be held in
the Account would have purchased if such dividend or
distribution had been reinvested at the Net Asset Value on
the investment date established by the Board with respect to
such dividend or distribution.
6. MANNER OF ELECTING OPTIONAL DEFERRALS; PAYMENT
ELECTIONS.
(a) NOTICE. Each Independent Board Member who participates in
a Plan shall complete, sign and file with the Companies for which he is an
Independent Board Member a Notice of Election (the "Notice") in one or more of
the forms attached hereto as Exhibits A, B and C. The Notice shall include, as
appropriate:
<PAGE>
(i) the amount, if any, of compensation to be deferred
under section 3(c);
(ii) the time or times of payment of any amounts credited and deferred under
sections 3(a) and (b) and of any amounts deferred under section 3(c);
(iii) the manner of payment of any amounts credited and deferred under
sections 3(a) and (b) and of any amounts deferred under section 3(c)
(I.E., in a lump sum or in a number of annual installments); and
(iv) any beneficiary designated pursuant to section 9(b) and the manner of
payment to such designated beneficiary.
(b) DATE OF FIRST PAYOUT OF OPTIONAL DEFERRALS UNDER SECTION
3(C). With respect to amounts deferred pursuant to section 3(c), each
Independent Board Member shall have the right in the Notice to elect to defer
the receipt of such deferred compensation until any one of the following events,
which such Independent Board Member shall specify in the Notice:
(i) the first business day of January following the
year in which such Independent Board Member
ceases
to be an Independent Board Member of the
Companies;
<PAGE>
(ii) the date such Independent Board Member specifically chooses
(but not earlier than the January 1 of the second calendar
year following the calendar year in which such election is
made); or
(iii) the date on which some specific future event
occurs which is not within the Independent Board
Member's control.
(c) DATE OF FIRST PAYOUT OF AMOUNTS CREDITED AND
DEFERRED UNDER SECTION 3(A) AND (B). With respect to amounts credited to an
Account and deferred under sec tions 3(a) and (b), each Independent Board Member
shall have the right in the Notice to elect to defer the receipt of such amounts
until any of the events referred to in sec tion 6(b), which such Independent
Board Member may specify separately for any amount credited under section 3(a)
and any amounts deferred under section 3(b), but such receipt may not be earlier
than the earliest of the following events:
(i) the first business day of January following the
year in which such Independent Board Member
ceases
to be an Independent Board Member of the
Companies;
(ii) the later of the first business day of January
following the year in which such Independent
Board
<PAGE>
Member turns 65 and January 1 of the second calendar year
following the calendar year in which such election is made;
and
(iii) the later of the first business day of January
following the year in which such Independent
Board
Member retires from his or her principal
occupation and January 1, of the second calendar
year following the calendar year in which such
election is made.
(d) FAILURE TO DESIGNATE. If an Independent
--------------------
Board Member who participates in a Plan fails to designate in his Notice a time
or date as of which payment of his Account (or any part of his Account) shall
commence, payment of such amount shall commence as of the date set forth in
(b)(i) above (unless the Independent Board Member files an amended Notice in
compliance with section 8(b) selecting a different distribution date). If an
Independent Board Member fails to designate in his Notice the manner of
distribution to apply to his Account (or any part of his Account), such Account
shall be distributed in a lump sum (unless the Independent Board Member files an
amended Notice in compliance with section 8(b) selecting a different method of
distribution).
(e) DISSOLUTION, ETC. Deferrals under this Plan
which are deemed invested in shares of a Company (or series
<PAGE>
of a Company) shall be distributed upon the dissolution, liquidation or winding
up of the Company (or other termination of the series), whether voluntary or
involuntary; or the voluntary sale, conveyance or transfer of all or
substantially all of a Company's (or a series') assets (unless the obligations
of the Company or the series shall have been assumed by another investment
company or another series of an investment company); or the merger of a Company
into another trust or corporation or its consolidation with one or more other
trusts or corporations (unless the obligations of the Company are assumed by
such surviving entity and such surviving entity is another investment company).
(f) HARDSHIP. Upon application by an Independent Board Member
and a determination by the Compensation and Nominating Committees of the Boards
that the Independent Board Member has suffered a severe and unanticipated
financial hardship, the Administrator shall distribute to the Independent Board
Member, in a single lump sum, an amount equal to the lesser of the amount needed
by the Independent Board Member to meet the hardship (pro-rata among the
Accounts), or the balance of the Independent Board Member's Accounts.
<PAGE>
7. EFFECTIVE DATE AND DURATION OF DEFERRAL ELECTIONS.
(a) ELECTION IRREVOCABLE. Except as provided in
sections 7(b) and 8(a), any election by an Independent Board Member or nominee
for election as an Independent Board Member to defer compensation pursuant to
section 3(c) shall be irrevocable from and after the date on which such person's
Notice is filed with the Companies. Elections to defer compensation pursuant to
section 3(c) shall be effective to defer an Independent Board Member's
compensation as follows:
(i) As to any Independent Board Member in office on
the effective date of the Plans who files a
Notice
no later than 60 days after such effective date,
the Notice shall be effective to defer any
compensation which may be deferred pursuant to
section 3(c) and is earned by such Independent
Board Member after the date of the filing of the
Notice;
(ii) As to any nominee for the office of trustee or
director who has not previously served as an
Independent Board Member and who files a Notice
prior to his election as an Independent Board
Member, such election to defer compensation
pursuant to section 3(c) shall be effective to
defer any compensation which may be deferred
<PAGE>
pursuant to section 3(c) and is earned by such
nominee after his election as an Independent
Board
Member; and
(iii) As to any other Independent Board Member, the
election to defer compensation pursuant to sec
tion 3(c) shall be effective to defer any
compensation which may be deferred pursuant to
section 3(c) and is earned from and after January
1 of the calendar year next succeeding the year
in
which the Notice is filed.
(b) CONTINUANCE OF NOTICES. Any election to
----------------------
defer compensation pursuant to section 3(c) made by an Independent Board Member
shall continue in effect unless and until the Company is notified in writing by
such Independent Board Member prior to the end of any calendar year that he
wishes to terminate such election or modify the amount of compensation deferred
pursuant to such election. Any such revocation or modification shall be
effective only with re spect to compensation earned after the calendar year in
which such amended Notice is filed with the Company. Upon receipt by the Company
from an Independent Board Member of such an amended Notice, the applicable
portion of compensation earned by such Independent Board Member from and after
January 1 of the calendar year succeeding the day on which such Notice was
received shall be paid currently
<PAGE>
and no longer deferred as provided in the Plan. However, any amounts in such
Independent Board Member's Account on such January 1 and any amount which the
Independent Board Member thereafter defers shall continue to be payable in
accordance with the Notice (or Notices) pursuant to which it was deferred except
as provided in section 8(a).
(c) SUBSEQUENT NOTICE. An Independent Board
Member who has filed a Notice to terminate deferment of
compensation may thereafter again file a Notice to
participate pursuant to section 6 hereof effective for the
calendar year subsequent to the calendar year in which he
files the new Notice.
8. CHANGES IN FORM AND TIMING OF PAYMENT OF DEFERRED
AMOUNTS.
An Independent Board Member may elect to change the timing and
manner of any distribution election with respect to any or all amounts deferred
and credited with respect to the Independent Board Member under the Plans by
filing an amended Notice with the Companies
(a) prior to the calendar year in which the
Independent Board Member ceases to be an Independent
Board Member of the Companies, and
(b) by a date such that at least one full
calendar year elapses between
<PAGE>
(i) the date as of which such amended Notice is
filed and
(ii) each of
(A) the date as of which a distribution
would otherwise have commenced and
(B) the date as of which such distribution
will commence under such amended
Notice.
No such amended Notice shall, however, provide for payment of an amount credited
under section 3(a) or 3(b) earlier than permitted in accordance with section
6(c), except as provided in section 9(b). 9. PAYMENT OF AMOUNTS CREDITED TO
ACCOUNTS.
(a) MANNER OF PAYMENT. An Account established by a Company for
an Independent Board Member will be paid in a lump sum or in installments, or
both, as specified in his Notice or amended Notice, and at the time or times
specified in the Notice or amended Notice. If installments are elected by an
Independent Board Member, such installments shall be paid in cash and the amount
of the first cash payment shall be a fraction of the then value of the portion
of such Account to be paid in installments, the numerator of which is one, and
the denominator of which is the total number of installments. The amount of each
subsequent cash payment shall be a fraction of the then value of such portion of
such Account remaining after the prior payment,
<PAGE>
the numerator of which is one and the denominator of which is the total number
of installments elected minus the number of installments previously paid. If a
lump sum is elected, payment shall be made in the full and fractional shares of
the Company (and of any series of such Company) in which the portion of such
Independent Board Member's Account to be paid in a lump sum is deemed invested.
(b) PAYMENT TO BENEFICIARY. In the event of an Independent
Board Member's death before he has received payment of all amounts in an Account
established by a Company for such Independent Board Member, the value of such
Account shall be paid to the beneficiary designated in such Independent Board
Member's Notice or, if no such beneficiary is designated, to such Independent
Board Member's estate, in accordance with the provisions of the Equity-Based
Plans. Any beneficiary so designated by an Independent Board Member may be
changed at any time by notice in writing from such Independent Board Member to
the Companies. Payments to a beneficiary shall be made in a lump sum or in
installments, or both, as specified in the Independent Board Member's Notice or
amended Notice. If a lump sum is elected, payment shall be made as soon as
reasonably possible in the full and fractional shares of the Company (and of any
series of such Company) in which such Account is deemed invested. If
installments are elected, such installments shall be paid in
<PAGE>
cash in amounts determined as provided in section 9(a). If
an Independent Board Member fails to designate in a Notice
or amended Notice on file with the Companies at the time of
his death the manner of distribution to his designated
beneficiary, any distribution to such beneficiary (or if no
such beneficiary is designated, to his estate) shall be
made
in a lump sum.
10. PRIOR DEFERRALS.
Notwithstanding anything else contained herein to the
contrary, if an Independent Board Member who is eligible to participate in a
Plan under section 2 hereof has deferred any compensation under any arrangement
in effect prior to the establishment of such Plan (i) such Independent Board
Member shall be deemed to be a participant in such Plan, (ii) the amount
credited for the benefit of such Independent Board Member under such arrangement
as of December 31, 1992 shall be credited to such Independent Board Member's
Account under such Plan as of January 1, 1993 and (iii) the provisions of such
Plan shall apply to such Independent Board Member and to the amount described in
subclause (ii) above as though such amount had been deferred under the terms of
such Plan. Elections under sections 6 or 8 by an Independent Board Member
subject to the provisions of this section 10 shall govern any amounts described
in this section.
<PAGE>
11. STATEMENTS OF ACCOUNT.
Each Company will furnish each Independent Board Member with a
statement setting forth the value of such Independent Board Member's Account
under that Company's Plan and the value of each portion of the Account that
relates to amounts deferred under each subsection of section 3 as of the end of
each calendar year and all credits to and payments from such Account during such
year. Such statements will be furnished no later than 60 days after the end of
each calendar year. 12. RIGHTS IN ACCOUNTS.
Credits to Accounts and any shares purchased by the Companies
to help satisfy the contractual obligations with respect to such Accounts shall
remain part of the general assets of the Companies, shall at all times be the
sole and absolute property of the Companies and shall in no event be deemed to
constitute a fund, trust or collateral security for the payment of the deferred
compensation to which Independent Board Members are entitled from such Accounts.
The right of any Independent Board Member or his designated beneficiary or
estate to receive future payment of deferred compensation under the provisions
of the Plans shall be an unsecured claim against general assets of the
Companies, if any, available at the time of payment.
<PAGE>
13. NON-ASSIGNABILITY.
Neither any Independent Board Member, his designated
beneficiary nor his estate, nor any other person shall have the right to
encumber, pledge, sell, assign or transfer the right to receive payments under
the Plans, except by will or by the laws of descent and distribution. All such
payments and the right thereto are expressly declared to be non-assignable. 14.
ADMINISTRATION.
The Equity-Based Plans shall be administered by one or more
officers of the Companies appointed by the Compensation and Nominating
Committees of the Boards (the "Administrator"). All Notices and amendments shall
be filed with the Administrator and the Administrator shall be responsible for
maintaining records of all Accounts and for furnishing the annual statements of
account provided for in section 11. The Administrator shall also have the
general authority to interpret, construe and implement provisions of the Plans.
Any determination by such officer(s) shall be binding on the Independent Board
Member and shall be final and conclusive. 15. AMENDMENT OR TERMINATION.
The Equity-Based Plans may at any time be
amended,
modified or terminated by the Board. However, no
amendment,
modification or termination shall adversely affect any
<PAGE>
Independent Board Member's rights in respect of amounts theretofore credited to
his Accounts.
16. EFFECTIVE DATE.
The Equity-Based Plans shall be effective as of January 1,
1993, and any amendments hereto shall be effective on the date of adoption
thereof by the Boards or as otherwise provided in such amendments. The Deferred
Compensation Plans in the form previously adopted by the Companies or the
arrangements of the Companies for deferred compensation in effect prior to the
establishment of the Equity-Based Plans, as the case may be, shall remain in
effect until January 1, 1993.
<PAGE>
SCHEDULE I
Funds Adopting the Equity-Based Plans
for Non-Interested Person Directors
AND TRUSTEES OF LORD ABBETT FUNDS
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Affiliated Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Series Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Lord Abbett Research Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Tax-Free Income Trust
Lord Abbett U.S. Government Securities Money
Market Fund, Inc.
<PAGE>
[For use by new Board members or EXHIBIT A
by Board members who are not
currently deferring compensation]
INDEPENDENT BOARD MEMBERS OF
LORD, ABBETT & CO.-SPONSORED FUNDS
Notice of Election
UNDER THE EQUITY-BASED PLANS
Effective for compensation that I earn as an Independent Board Member
of each Lord Abbett-sponsored Fund in the future after I become an Independent
Board Member or after the calendar year in which this Notice of Election is
filed with the Companies if I am already an Independent Board Member, I hereby
elect under section 6(a) and, if I am not already an Independent Board Member,
section 6(c) of the Equity-Based Plans, as follows:
A. Optional deferrals pursuant to section
3(C) OF THE EQUITY-BASED PLANS.
1. AMOUNT DEFERRED:
(a) All compensation that I may defer
pursuant to section 3(c) of the Equity-
Based Plans
(b) $ per month (pro rated
among all Funds and series on the basis
of such compensation)
(c) Other:
2. PERIOD OF ELECTION:
Subject to my further election to change or terminate this
election, my deferred election under item 1 shall continue:
(a) Until I cease to be an Independent
Board
Member
(b) Until
[specify date or event]
<PAGE>
3. TIME OF PAYMENT:
(a) The first business day of January
following the year in which I cease to
be an Independent Board Member
(b) The first business day of (not earlier than
January 1 of the second calendar year
following the calendar year in which this
Notice of Election is filed with the
Companies):
[specify
month/year]
(c) The date of the following specific
event
which is not within my control:
4. NUMBER OF PAYMENTS:
(a) Entire amount in a lump sum
(b) In annual installments
calculated as provided in section 9(a)
of the Equity-Based Plans
(c) With the consent of the Companies, as
follows:
B. Mandatory deferrals pursuant to section 3(b) of the EQUITY-BASED PLANS (NEW
INDEPENDENT BOARD MEMBERS ONLY).
1. TIME OF PAYMENT:
(a) The first business day of January
following the year in which I cease
to be an Independent Board Member
(b) The first business day of:
[specify
month/year]
(c) The date of the following specific
event
which is not within my control:
Any date or event specified in the foregoing paragraph (b) or
(c) may not be earlier than the earliest of the following:
<PAGE>
(i) the first business day of January
following the year in which I cease to
be an Independent Board Member,
(ii) the later of the first business day of
January following the year in which I turn
65 and January of the second calendar year
following the calendar year in which this
Notice of Election is filed with the
Companies, and
(iii) the later of the first business day of
January following the year in which I
retire from my principal occupation and
January of the second calendar year
following the calendar year in which this
Notice of Election is filed with the
Companies
If the date or event specified in the foregoing paragraph (b)
or (c) precedes the earliest of the dates referred to in the
foregoing clauses (i), (ii) and (iii), the time of payment
shall be the earliest of such dates referred to in clauses
(i), (ii) and (iii).
2. NUMBER OF PAYMENTS:
(a) Entire amount in a lump sum
(b) In annual installments
calculated as provided in section 9(a)
of the Equity-Based Plans
(c) With the consent of the Companies, as
follows:
C. DESIGNATION OF BENEFICIARY:
I hereby designate * as my beneficiary to receive all payments in the
event of my death before payments in full hereunder have been made. In
the event that the said beneficiary predeceases me, I hereby designate
* as beneficiary instead.
Benefits payable to my designated beneficiary shall be paid in
accordance with section 9(b) of the Equity- Based Plans, as follows:
<PAGE>
(a) Entire amount in a lump sum
(b) In annual installments
calculated as provided in section 9(a) of
the
Equity-Based Plans
(c) In the event I have elected pursuant to A4(b) or
B2(b) above to receive annual installments but such
installments have not been paid in full, such
installments shall be continued and paid to my
designated beneficiary
(d) With the consent of the Companies, as
follows:
Name:
Date:
* If more than one beneficiary is to be designated, add a page listing the
beneficiaries and specify the percentage of each payment to be received by each
beneficiary.
<PAGE>
[For use on or prior to EXHIBIT B
November 29, 1996 by Board
members who wish to convert
their retirement benefit
to an equity-based benefit]
INDEPENDENT BOARD MEMBERS OF
LORD, ABBETT & CO.-SPONSORED FUNDS
Notice of Election to Receive Benefits
under the Equity-Based Plans in
LIEU OF BENEFITS UNDER THE RETIREMENT PLAN
1. Election to Receive Benefits
UNDER THE EQUITY-BASED PLANS:
____ I hereby elect (A) pursuant to section 3(a) of
-
the
Equity-Based Plans and Article III of the
Retirement Plan to receive benefits under
sections
3(a) and 3(b) of the Equity-Based Plans in lieu
of
retirement benefits under the Retirement Plan and
(B) pursuant to sections 6(a) and 6(c) of the
-
Equity-Based Plans as follows with respect to
such
benefits:
2. TIME OF PAYMENT:
(a) The first business day of January
following the year in which I cease to
be an Independent Board Member
(b) The first business day of:
[specify
month/year]
(c) The date of the following specific event
which is not within my control:
Any date or event specified in the foregoing paragraph (b) or
(c) may not be earlier than the earliest of the following:
(i) the first business day of January following
the year in which I cease to be an
Independent Board Member,
(ii) the later of the first business day of
January following the year in which I turn
65 and January 1, 1998, and
<PAGE>
(iii) the later of the first business day of
January following the year in which I
retire from my principal occupation and
January 1, 1998
If the date or event specified in the foregoing paragraph (b)
or (c) precedes the earliest of the dates referred to in the
foregoing clauses (i), (ii) and (iii), the time of payment
shall be the earliest of such dates referred to in clauses
(i), (ii) and (iii).
3. NUMBER OF PAYMENTS:
(a) Entire amount in a lump sum
(b) In annual installments
calculated as provided in section 9(a) of
the
Equity-Based Plans
(c) With the consent of the Companies, as
follows:
4. DESIGNATION OF AND PAYMENTS TO BENEFICIARY:
I hereby designate * as my beneficiary to receive payments of the
benefits under Sections 3(a) and 3(b) of the Equity-Based Plans in the
event of my death before payments of such benefits have been made in
full. In the event that the said beneficiary predeceases me, I hereby
designate ___________________* as beneficiary instead.
Benefits payable to my designated beneficiary shall be paid in
accordance with section 9(b) of the Equity- Based Plans, as follows:
(a) Entire amount in a lump sum
(b) In annual installments
calculated as provided in section 9(a) of
the
Equity-Based Plans
(c) In the event I have elected pursuant to 3(b) above to
receive annual installments but such installments
have not been paid in full, such installments shall
be continued and paid to my designated beneficiary
<PAGE>
(d) With the consent of the Companies, as
follows:
Name:
Date: November , 1996
* If more than one beneficiary is to be designated, add a page listing the
beneficiaries and specify the percentage of each payment to be received by each
beneficiary.
<PAGE>
[For use by Board members EXHIBIT C
who wish to change a
prior election]
INDEPENDENT BOARD MEMBERS OF
LORD ABBETT & CO.-SPONSORED FUNDS
Amended Notice of Election
UNDER THE EQUITY-BASED PLANS
I hereby elect pursuant to section 7(b) or 7(c) and section 8 of the
Equity-Based Plans to change all prior Notices of Election I have filed with the
Companies as follows:
D. Optional deferrals pursuant to section
3(C) OF THE EQUITY-BASED PLANS.
1. AMOUNT DEFERRED:
Effective for compensation earned as an Independent Board
Member of each Lord Abbett- sponsored Fund after the calendar
year in which this Amended Notice of Election is filed with
the Companies, I hereby elect to defer under section 3(c) of
the Equity-Based Plans:
___ (a) All compensation that I may defer
pursuant to section 3(c) of the Equity-
Based Plans
___ (b) $_____________ per month (pro rated
among all Funds and series on the basis
of such compensation)
___ (c) Other: ____________________________
___ (d) None
2. PERIOD OF ELECTION:
Subject to my further election to change or terminate this
election, my deferred election under item 1 shall continue:
___ (a) Until I cease to be an Independent
Board Member
<PAGE>
___ (b) Until _____________________________
[specify date or event]
Effective for ALL amounts deferred under section 3(c) of the
Equity-Based Plans, including any amounts previously deferred,
I hereby elect as follows:
3. TIME OF PAYMENT:
___ (a) The first business day of January
following the year in which I cease
to be an Independent Board Member
___ (b) The first business day of:________
----------------------
[specify month/year]
___ (c) The date of the following specific
event
which is not within my control:
4. NUMBER OF PAYMENTS:
___ (a) Entire amount in a lump sum
___ (b) In _____ annual installments calculated
as provided in section 9(a) of the
Equity-Based Plans
___ (c) With the consent of the Companies,
as follows:_______________________
---------------
E. Mandatory deferrals pursuant to section
3(B) OF THE EQUITY-BASED PLANS.
1. TIME OF PAYMENT:
(a) The first business day of January
following the year in which I cease to
be an Independent Board Member
(b) The first business day of:
[specify
month/year]
(c) The date of the following specific
event
which is not within my control:
<PAGE>
Any date or event specified in the foregoing paragraph (b) or
(c) may not be earlier than the earliest of the following:
(i) the first business day of January
following the year in which I cease to
be an Independent Board Member,
(ii) the later of the first business day of
January following the year in which I turn
65 and January of the second calendar year
following the calendar year in which this
Notice of Election is filed with the
Companies, and
(iii) the later of the first business day of
January following the year in which I
retire from my principal occupation and
January of the second calendar year
following the calendar year in which this
Notice of Election is filed with the
Companies
If the date or event specified in the foregoing paragraph (b)
or (c) precedes the earliest of the dates referred to in the
foregoing clauses (i), (ii) and (iii), the time of payment
shall be the earliest of such dates referred to in clauses
(i), (ii) and (iii).
2. NUMBER OF PAYMENTS:
(a) Entire amount in a lump sum
(b) In annual installments
calculated as provided in section 9(a)
of the Equity-Based Plans
(c) With the consent of the Companies, as
follows:
F. DESIGNATION OF BENEFICIARY:
I hereby revoke any prior beneficiary designation I may have made under
the Equity-Based Plans, and I hereby designate ___________________* as
my beneficiary to receive payments in the event of my death before
payments in full hereunder have been made. In the
<PAGE>
event that the said beneficiary predeceases me, I hereby designate
____________________* as beneficiary instead.
Benefits payable to my designated beneficiary shall be paid in
accordance with section 9(b) of the Equity- Based Plans, as follows:
(a) Entire amount in a lump sum
(b) In annual installments
calculated as provided in section 9(a) of
the
Equity-Based Plans
(c) In the event I have elected pursuant to A4(b) or
B2(b) above to receive annual installments but such
installments have not been paid in full, such
installments shall be continued and paid to my
designated beneficiary
(d) With the consent of the Companies, as
follows:
I understand that this Amended Notice of Election shall be valid with
respect to changes in the timing or number of payments only if it is filed with
the Company (i) prior to the calendar year in which I cease to be an Independent
Board Member, (ii) by a date such that one full calendar year elapses between
the filing of this Amended Notice with the Companies and the date my
distribution would otherwise have commenced under my prior Notice of Election
and (iii) by a date such that one full calendar year elapses between the filing
of this Amended Notice with the Companies and the date my distribution will
commence under this Amended Notice of Election. My prior Notice of Election
shall be effective to the extent this Amended Notice of Election is invalid and
to the extent no entry is made under any of the above items.
--------------------------
Name:
Date: _____________________
* If more than one beneficiary is to be designated, add a page listing the
beneficiaries and specify the percentage of each payment to be received by each
beneficiary.
FUND SERVICES AGREEMENT
AGREEMENT dated as of July __, 1996 by and between Merrill Lynch Pierce,
Fenner & Smith Incorporated ("Merrill Lynch") and Lord, Abbett & Co.
("Fund Provider").
WHEREAS, Merrill Lynch has been retained by certain sponsors
of qualified employee benefit plans (individually, a "Plan" and, collectively,
the "Plans") to provide recordkeeping and related administrative services,
including the processing of orders for investment and reinvestment of Plan
assets in the Plan's investment options, on behalf of such Plans; and
WHEREAS, the Fund Provider is the principal underwriter or
distributor for certain funds, each of which is an open-end investment company
registered under the Investment Company Act of 1940, as amended (individually,
the "Fund" and, collectively, the "Funds"), which the Plans wish to offer as
investment options; and
WHEREAS, the Fund Provider desires to retain Merrill Lynch to
perform certain administrative services on behalf of the Funds and Merrill Lynch
is willing and able to furnish such services on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, Merrill Lynch and the Fund Provider agree as
follows:
1. MERRILL LYNCH SERVICES. Merrill Lynch agrees to provide the
---------------------- administrative services specified in Attachment A
hereto (the "Services") for the benefit of the Plans who offer the Fund or
Funds as an investment option(s) to participants in the Plans (the
"Participants") and whose shares are included in the master account
referred to in paragraph 1 of Attachment A. Merrill Lynch agrees that it
will maintain and preserve all records as required by law to be maintained
and preserved in connection with providing the Services, and will otherwise
comply with all law, rules and regulations applicable to the Services. Upon
request of the Fund Provider acting in its capacity described herein,
Merrill Lynch shall provide copies of all the historical records relating
to transactions involving the Funds and the Plans, all written
communication regarding those Funds to and from such Plans and other
materials, in each case as may reasonably be requested to enable the Funds
or their respective representatives to monitor and review the Services, or
to comply with any request of the board of directors or trustees of the
Funds or of a governmental body, self-regulatory organization or a
shareholder Plan. Merrill Lynch agrees that it will permit the Fund
Provider or its representative to have reasonable access to its personnel
and records in order to facilitate the monitoring of the quality of the
Services.
2. TRANSACTIONS IN THE FUNDS. The Fund Provider will purchase, exchange and
redeem shares of each Fund for the Plans at such Fund's net asset
<PAGE>
valuewith a waiver of the contingent deferred sales charge or redemption
fee, if any. Dividends and capital gains distributions will be
automatically reinvested in
<PAGE>
full and fractional shares of the Fund at net asset value next determined
on the reinvestment date for such dividends and distributions. The Fund
Provider shall comply with all law, rules and regulations applicable to it
by virtue of entering into this Agreement and shall maintain and preserve
all records as required by any such laws, rules and regulations.
3. PROCEDURES AND TIMING OF TRANSACTIONS. On each day the New York Stock
Exchange is open for business ("Business Day"), Merrill Lynch will receive
instructions from Participants for the purchase, redemption and exchange of
shares of the Funds. Instructions received by Merrill Lynch after 4:00 p.m.
Eastern Standard Time (EST) on any Business Day will be treated as if
received on the next following Business Day.
a. The parties shall process the transactions relating to the
instructions received from Participants in accordance with the
procedures set forth in Attachment B hereto.
4. FUND INFORMATION. The Fund Provider will provide the information set
---------------- forth in Attachment C hereto for each of the Funds. The
Fund Provider hereby agrees that Merrill Lynch may use the information
provided by the Fund Provider pursuant to this Section 4 in communications
prepared for the Plans, including, but not limited to, Participant
enrollment and other communications materials and voice response systems as
well as proposals prepared and submitted by Merrill Lynch to sponsors of
employee benefit plans or their representatives who have expressed interest
in Merrill Lynch's plan services.
5. PROSPECTUS AND PROXY DELIVERY. The Fund Provider shall provide Merrill
Lynch with a sufficient quantity of prospectuses for each Fund to be used
in conjunction with the transactions contemplated by this Agreement. Upon
request, the Fund Provider shall also provide to Merrill Lynch, in
sufficient quantity for each Participant invested in the Fund, proxy
materials, financial statements and reports and other material relating to
each Fund.
6. COMPENSATION AND EXPENSES. In consideration of the Services by Merrill
Lynch, the Fund Provider will pay Merrill Lynch during the term of this
agreement the fees set forth in Attachment D hereto. Merrill Lynch will
calculate the amount of the fees and payment will be due within 30 days of
receipt by the Fund provider of Merrill Lynch's invoice for such fees.
7. REPRESENTATIONS. Merrill Lynch represents that it has full power and
authority to enter into and perform this Agreement. Merrill Lynch also
<PAGE>
hereby represents that it will promptly notify the Fund Provider in the
event that Merrill Lynch is for any reason unable to perform any of its
obligations under this Agreement.
a. The Fund Provider represents that it has full power and
authority to enter into and perform this Agreement. The Fund
Provider also hereby represents that it will promptly notify
Merrill Lynch in the event that the Fund Provider is for any
reason unable to perform and of its obligations under this
Agreement.
8. USE OF NAMES. Except as otherwise expressly provid ed for in this
Agreement, neither the Fund Provider nor the Funds shall use the name or
logo of Merrill Lynch or any variation of such name or logo or any
tradename or service mark of Merrill Lynch without Merrill Lynch's prior
written consent, which may be unreasonably withheld. Except as otherwise
expressly provided for in this Agreement, Merrill Lynch shall not use the
name or logo of the Fund Provider, or any variation of such name or logo or
any tradename or service mark of the Fund Provider without the Fund
Provider's prior written consent, which may not be unreasonably withheld.
9. INDEMNITY. The Fund Provider shall indemnify and hold harmless Merrill
Lynch and its directors, officers, employees and agents, from and
against all claims, liabilities, losses, damages or expenses, including
reasonable attorneys' fees, imposed on Merrill Lynch or incurred by Merrill
Lynch to the extent arising out of any act of commission or omission by the
Fund Provider relating to this Agreement or the services rendered
hereunder, including, but not limited to, any loss incurred by Merrill
Lynch due to errors in the Fund information provided to Merrill Lynch
pursuant to Section 4 hereunder or any loss related to discrepancies
between the participant balances maintained by Merrill Lynch and the Fund
balances maintained by the Fund Provider due to errors caused by the Fund
Provider.
a. Merrill Lynch shall indemnify and hold harmless the Fund Provider
and its directors, officers, employees and agents, from and
against all claims, liabilities, losses, damages or expenses,
including reasonable attorneys' fees, imposed on, or incurred by,
the Fund Provider to the extent arising out of any act of
commission or omission by Merrill Lynch relating to this
Agreement or the services rendered hereunder, including, but not
limited to, any loss related to discrepancies between the
participant balances maintained by Merrill Lynch and the Fund
balances maintained by the Fund Provider due to errors caused by
Merrill Lynch.
10. CONFIDENTIALITY. Each party will treat confidentially, by not
disclosing to unaffiliated persons, all information and documentation
provided by the other party or relating to the Plans (including the
identity of the Plans and information regarding the Participants)
except (I) to the Trustee of the Plans, any administrator of the Plans
or any person as may be necessary in connections with the proper
operation of this Agreement and the Plans, (II) in connection with an
audit or regulatory examination, or (III) as may otherwise be legally
required.
11. TERMINATION; WITHDRAWAL OF OFFERING. Either party may terminate this
Agreement upon
<PAGE>
ten (10) days written notice to the other party; provided, however,
that the Fund Provider reserves the right, without notice, to suspend
sales or to withdraw the offering of shares of any Fund, in whole or in
part, or to make a limited offering of shares of the Fund in the event
that (A) any regulatory body commences formal proceedings against the
Fund Provider or the Fund which proceeding the Fund Provider or the
Fund believes will have a material adverse impact on the Fund
Provider's ability to perform its obligations under this Agreement or
(B) in the judgment of the Fund's management, the Fund's declining to
accept any additional instructions for the purchase or sale of shares
of the Funds is warranted by market, economic or political conditions,
or (C) the Fund is unable to offer its shares without violating a
____________. Notwithstanding the foregoing, this Agreement shall be
terminated immediately upon either (I) a material breach by either
party which is not cured within 30 days after notice from the other
party, or (II) upon termination of services by either party to the
Plans. Termination of this Agreement, however, shall not affect the
obligations of the parties to make payments under Attachment B for
instructions involving shares of the Funds received by Merrill Lynch
prior to such termination.
12. NON-EXCLUSIVITY. Each of the parties acknowledges and agrees that this
Agreement and the arrangement described herein are intended to be
non-exclusive and that each of the parties is free to enter into similar
agreements and arrangements with other entities.
13. SURVIVAL. The provisions of Sections 8, 9, and 10 of this Agreement shall
survive termination of this Agreement.
14. AMENDMENT. This Agreement may not be modified or amended except by an
instrument in writing signed by Merrill Lynch and the Fund Provider.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSIDERED AS EXECUTED AND DELIVERED
IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THAT STATE.
16. ENTIRE AGREEMENT. This Agreement, including the Attachments hereto,
constitutes the entire agreement between the parties with respect to the
matters dealt with herein, and supersedes all previous agreements, written
or oral, with respect to such matters.
IN WITNESS WHEREOF, the Fund Provider and Merrill Lynch have each
caused this Agreement to be executed in its corporate name by its duly
authorized officer, as of the date set forth above.
Fund Provider
By:
Print Name:
<PAGE>
Title:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
Print Name:
Title:
<PAGE>
ATTACHMENT A
Merrill Lynch Services
Pursuant to the Agreement by and between the parties hereto, Merrill Lynch shall
perform the following Services:
1. Maintain separate records for each Plan which offers the Funds as an
investment option(s) to Participants, which records shall reflect the shares
purchased and redeemed and share balances. Merrill Lynch will maintain a single
master account with the transfer agent of each Fund on behalf of the Plans for
which Merrill Lynch Trust Company or one of its affiliates is acting as trustee
and such account shall be in the name of "Merrill Lynch Trust Company, Trustee"
or its nominee as the record owner of the shares owned by such Plans. In the
case of a Plan for which Merrill Lynch Trust Company or one of its affiliates is
not acting as trustee, a separate account will be established in the name of the
trustee of such Plan.
2. Disburse or credit to the Plans all proceeds of redemptions of
shares of the Fund and all dividends and other distributions not reinvested in
shares of the Fund.
3. Prepare and transmit to the Plans periodic statements showing the
total number of shares owned by the Plans as of the statement closing date,
purchases and redemptions of Fund shares by the Plans during the period covered
by the statement and the dividends and other distributions paid to the Plans
during the statement period (whether paid in cash or reinvested in Fund shares).
4. Transmit to the Fund's transfer agent purchase and redemption orders
on behalf of the Plans in accordance with the procedures set forth in Attachment
B to the Agreement.
<PAGE>
ATTACHMENT B
Procedures and Timing of Transactions Relating to
Purchases and Redemptions of Shares of the
funds Pursuant to Section 3 of the Agreement
(1) By 10:00 a.m. EST on the next Business Day following receipt of
such instructions, Merrill Lynch will provide to the fund Provider via facsimile
a report detailing the instructions received from Participants the prior
Business Day for each of the Funds. For purchases, the report will reflect the
dollar amount to be invested in each Fund (net purchases and exchanges), the
price per share of each Fund and the full and fractional number of shares to be
purchased in each Fund. For redemptions, the report will reflect the dollar
amount to be redeemed from each Fund (net redemptions and exchanges), the price
per share of each Fund and the full and fractional number of shares to be
redeemed from each Fund. The report will also reflect the opening and ending
share balances for each Fund. Merrill Lynch will provide via facsimile this
report to the Fund Provider each Business Day, regardless of whether there are
any transactions involving the funds. If for any reason Merrill Lynch is unable
to provide this report, Merrill Lynch will notify the Fund Provider by 10:00
a.m. EST each Business Day.
(2) The fund Provider will notify Merrill Lynch by 10:30 a.m. EST each
Business Day if the report has not yet been received. Upon receipt of the report
from Merrill Lynch, the Fund Provider will execute the purchase and redemption
transactions on a daily basis at the net asset value computed at the close of
trading on the New York Stock Exchange ("Close of Trading") on the prior
Business Day ("Effective Trade Date"). The Fund Provider agrees that such
purchase and redemption transactions will settle on the Business Day following
the Effective Trade Date.
(3) By 3 p.m. EST, the Fund Provider will provide to Merrill Lynch via
facsimile a report reflecting Participant transactions occurring in each Fund.
For purchases, the report will reflect dollar amount invested in each Fund, the
price per share and the number of full and fractional shares purchased in each
Fund. For redemptions, the report will reflect the dollar amount redeemed from
each Fund, the price per share and the number of full and fractional shares
redeemed from each Fund. For dividend and capital gains distributions, the
report will also reflect the dollar amount of the dividend and capital gains
distributions reinvested in each Fund, the price per share and the number of
full and fractional shares purchased in each Fund. Additionally, the report will
reflect the opening and closing share balances for each of the Funds.
(4) By 6:00 p.m. EST on each Business Day, the Fund Provider will
provide to Merrill Lynch (I) the Fund's net asset value at the Close of Trading,
(II) in the Case of income Funds, the daily accrual or interest rate factor (mil
rate) and (III) when applicable, record date, ex-dividend date and payable date
information for dividends and capital gains distributions. By 4:00 p.m. EST on
each Business Day, Merrill Lynch will provide to the Fund Provider via facsimile
an estimate of the dollar amount to be redeemed from each Fund (net redemptions
and exchanges) based upon instruction received by Merrill Lynch from
Participants on that Business Day.
(5) For purchase instructions, Merrill Lynch will initiate by 12 p.m.
EST a federal funds wire payment to a custodian account designated in writing by
the Fund Provider on the next Business Day following the Effective Trade Date.
For redemption instructions, the Fund
<PAGE>
Provider will initiate by 12 p.m. EST a federal funds wire payment to a
custodian account designated by Merrill Lynch on the next Business Day following
the Effective Trade Date.
<PAGE>
ATTACHMENT C
Information to be Provided for each Fund Pursuant to Section 4 of the
Agreement
Pare I. FUND REPORTING AND PERFORMANCE INFORMATION
A. The fund Provider will provide the following information with respect to
each Fund:
o Name of the Fund
o Objective of the Fund
o Investor Profile (What type of investor is this Fund designed for?)
o Portfolio concept (What types of investments make up the Fund's portfolio?)
o Name of Fund manager
o Biography, including tenure with the Fund, of the fund manager
o Inception date of the fund
o Historical performance data for the Fund - Annual total return since
inception - Quarterly total return since inception
o All relevant changes to the Fund's method of doing business.
B. The fund Provider will provide the following information to Merrill Lynch
within five (5) Business Days of the end of each calendar quarter:
EQUITY FUNDS
o A four to five sentence, one to two paragraph, portfolio manager commentary
on how the fund performed for the quarter, why did it perform so well (or
poorly), what does the manager feel will be happening in the market, and
how is the manager planning for projected changes in the market, etc.
o Fund Asset Size.
o Asset Mix (Name and Percentage of Portfolio).
o Top Five Major Sector Weightings (name and percentage of portfolio).
o Top Ten Holdings.
o Average Equity Capitalization.
o Number of Equity Holdings.
o Management fees and expenses (broken down into management fees, 12b-1 fees,
other expenses, and total operating expenses of the Fund).
o One, three, five and ten year annualized rates of return for the current
period.
o Total return for the current quarter, year to date, and since inception of
the fund from/for the current period.
FIXED INCOME FUNDS
o A four to five sentence, one to two paragraph, portfolio manager commentary
on
<PAGE>
how the fund performed for the quarter, why did it perform so well (or so
poorly), what does the manager feel will be happening in the market, and
how is the manager planning for projected changes in the market, etc.
o Fund Asset Size.
o Asset Mix (Name and Percentage of Portfolio).
o 30-Day Yield.
o Average Maturity.
o Average Duration.
o Average Coupon.
o Management fees and expenses (broken down into management fees, 12b-1 Fees,
other expenses, and total fund operating expenses).
o One, three, five and ten year annualized rates of return for the current
period.
o Total return for the current quarter, year to date, and since inception of
the fund form/for the current period.
o Yield for current quarter, year-to-date, preceding 30 days, and preceding
12 months.
Part II. FUND DESCRIPTION FOR THE VOICE RESPONSE SYSTEM
o The Fund Provider will provide to Merrill Lynch, within ten
(10) days of the end of each month, the Fund's average annual
return for the 1, 5, and 10 year periods ending the current
month on a Net Asset Value basis.
o The Fund Provider will provide to Merrill Lynch a description
of the Fund which will be used on Merrill Lynch's Voice
Response System in the following VRS format:
ABC FUND
The Net Asset Value per share for ABC Fund as of MM/DD/YY was $XXX.XX.
The average annual total return for the Fund for the one year period
ended MM/DD/YY was XXX.XX%, for the five year period ended MM/DD/YY was
XXX.XX%. These total return figures assume reinvestment of all dividend
and capital gains distributions at Net Asset Value. Total investment
return is the combination of net income and gain or loss in market
value.
The ABC Fund seeks the highest total investment return consistent with
prudent risk. The portfolio may be invested in equity securities,
corporate bonds or money market securities. Historically, the Fund's
equity portfolio has been invested in the common stocks of larger,
quality companies.
Please be advised that past performance is no indication of future
performance. Investment return and principal value of an investment
will fluctuate so that shares, when redeemed, may be worth more or less
than their original cost. You should request and read the Fund
prospectus prior to investing.
<PAGE>
Part III. PROPOSAL INFORMATION AND MATERIALS
The Fund Provider will provide to Merrill Lynch the following
information and materials on an as needed basis:
o A supply of materials relating to the Funds
(prospectuses, quarterly reports and other brochures)
to include with proposal requests from prospects.
o Specific investment performance information that may
be requested in a Request For Proposal that cannot be
obtained from the prospectus. This would include
specific calculations on various performance
parameters and will require an aggressive turnaround
time (usually 5 business days).
<PAGE>
ATTACHMENT D
Fee Schedule
A. The Fund Provider shall pay to Merrill Lynch a non-refundable, one time
account set-up fee of $50,000. Payment shall be made with the return of the
signed "Fund Service Agreement."
B. The Fund Provider shall pay to Merrill Lynch FOR EACH FUND the following
fees:
1. SUB-ACCOUNTING FEE
$16.00 annually per each participant holding shares of the
Fund. Payment shall be made monthly based upon the number of
participants of a Fund who hold shares of such Fund in a Plan
for any part of the subject month.
2. SERVICE FEE
.20% of annual average daily value of the Fund's net assets held
in the Plans. Payment shall be made quarterly.
3. TRAIL COMMISSION
Payment shall be made quarterly.
4. SALES COMMISSION (Finders Fee)
Not applicable.
B. The Fund Provider agrees to waive certain fees including, but not limited
to, the following:
1. Initial Sales Charges
2. Contingent Deferred Sales Charges
3. Redemption Fees
4. Exchange Fees
5. Federal Funds Wire Payment Fees
CONSENT OF INDEPENDENT AUDITORS
Lord Abbett Series Fund, Inc. Growth and Income Portfolio-Pension Class:
We consent to the incorporation by reference in Post-Effective Amendment No. 10
to Registration Statement No. 33-31072 of our report dated January 26, 1996,
appearing in the annual report to shareholders and to the reference to us under
the captions "General Information" in the Prospectus and "Investment Advisory
and Other Services" and "Financial Statements" in the Statement of Additional
Information, both of which are part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
New York, New York
October 28, 1996
draft 10/25/96
DISTRIBUTION PLAN
Section 1. Lord Abbett Series Fund, Inc. (the "Fund") is a diversified
open-end management investment company incorporated under the laws of the state
of Maryland, the shares of common stock (the "Shares") of the portfolios of
which (each, a "Portfolio") may from time to time be offered to life insurance
companies (each, a "Life Company") for allocation to certain of their separate
accounts established for the purpose of funding variable annuity contracts and
variable life policies (collectively referred to herein as "Variable
Contracts").
Section 2. In order to provide for the implementation of the payments
provided for pursuant to this Distribution Plan (the "Plan"), the Fund may enter
into a Distribution Agreement (the "Agreement") with Lord Abbett Distributor
LLC. (the"Distributor"), the Fund's Investment Adviser, wherein Lord Abbett will
serve as the distributor of the Fund's Shares, and pursuant to which each
Portfolio participating in this Plan may pay Lord Abbett for remittance to a
Life Company for various costs incurred by the Life Company in connection with
the distribution of Shares of that Portfolio. Such Agreement, or any
modification thereof, shall become effective with respect to any Portfolio in
compliance with Section 12(b) of the Investment Company Act of 1940, as amended
(the "Act"), and Rule 12b-1 thereunder as the same may be amended from time to
time.
Section 3. Upon effectiveness of this Plan with respect to any
Portfolio, the Fund, on behalf of such Portfolio, may pay quarterly to Lord
Abbett for remittance to a Life Company, in order to pay or reimburse such Life
Company for Distribution Expenses (as defined below) incurred or paid (as the
case my be) by such life Company and approved by the Fund's Board of Directors
in the manner provided under Section 8 hereof, provided that no such remittance
shall be made with respect to any period in excess of an amount determined for
such period at the annual rate of .15% of the average daily net asset value of
the Shares of such Portfolio attributable to that Life Company's Variable
Contract owners. The value of the net assets of a Portfolio shall be determined
as provided in the Articles of Incorporation of the Fund, as the same may be
amended from time to time.
Section 4. Expenses payable pursuant to this Plan ("Distribution
Expenses") shall include, but not necessarily be limited to, the following:
(a) the costs of the printing and mailing of Fund prospectuses,
statements of additional information, any supplements thereto and shareholder
reports to existing and prospective Variable Contract owners; and
(b) the costs relating to the development and preparation of Fund
advertisements and other promotional materials describing and/or relating to the
Fund.
Section 5. This Plan shall not take effect with respect to any
Portfolio until it has been approved by a vote of at least a majority of the
outstanding voting securities (as defined in the Act) of the Portfolio.
Section 6. This Plan together with the Agreement, shall not take effect
until they have been approved by a vote of the majority of directors of the Fund
and of those directors of the
<PAGE>
Fund who are not "interested persons" of the Fund (as defined in the Act), and
who have no direct or indirect financial interest in the operation of this Plan
or in the Agreement (the "Independent Directors"), cast in person at a meeting
called for the purpose of voting on this Plan and such Agreement.
Section 7. This Plan shall continue in effect for as long as such
continuance is specifically approved by the directors of the Fund and the
Independent Directors at least annually in the manner provided in Section 6. In
connection with the annual review and approval of such continuance, Lord Abbett
shall furnish the Board with such information as the Board may reasonably
request in order to enable the Board to make an informed determination of
whether the Plan should be continued.
Section 8(a). Lord Abbett shall, with respect to each Portfolio for
which payments of Distribution Expenses are proposed to be made, submit:
(i) at least annually, as soon as practicable, but in any case no later
than the end of the first month of a fiscal year, a budget of proposed payments
of Distribution Expenses for such fiscal year (or portion thereof in the case of
a proposed period of less than one year);and
(ii) at least quarterly, reports (A) describing the Distribution
Expenses with respect to such Portfolio incurred or paid by each Life Company
since the later of the effective date of this Plan or the previous period for
which payments hereunder have been made by the Portfolio and (B) requesting
payment or reimbursement therefor (as the case may be).
In the event that amounts of Distribution Expenses are not specifically
attributable to the distribution of Shares of any particular Portfolio, Lord
Abbett may allocate Distribution Expenses to each Portfolio deemed by the Board
to be reasonably likely to benefit therefrom based upon the ratio of the average
daily net assets of each such Portfolio during the previous period to the
aggregate average daily net assets of all such Portfolios for such period,
provided, however that any such allocation may be subject to such adjustments as
Lord Abbett shall deem appropriate to render the allocation fair and equitable
under the circumstances, which adjustments shall be approved by the Board of
Directors.
(b). The Board of Directors will review each quarterly report of, and
request for, payment of Distribution Expenses at its regular meeting next held
after the making of such request, and Lord Abbett shall receive from the Fund,
on behalf of any Portfolio, only an amount for such Distribution Expenses as is
approved by the Board of Directors, including a majority of the Independent
Directors. The Fund will make payment of the amount of Distribution Expenses so
approved as soon as practicable after such approval.
Section 9. This Plan may be terminated as to any Portfolio at any time
by vote of a majority of the Independent Directors, or by vote of a majority of
the outstanding voting securities (as defined in the Act) of that Portfolio.
Section 10. The Agreement related to this Plan shall be in writing and
shall provide in substance: (a) That such AgreementI with respect to any
Portfolio, may be terminated at any time,
<PAGE>
without payment of any penalty, by vote of a majority of the Independent
Directors or by vote of a majority of the outstanding voting securities (as
defined in the Act) of that Portfolio, on not more than 60 days' written notice
to Lord Abbett; and (b) That such Agreement shall terminate automatically in the
event of its assignment.
Section 11. This Plan may not be amended to increase materially the
amount to be spent for distribution by any Portfolio without the approval of
shareholders of that Portfolio, and any material amendment to the Plan must be
approved by the Board of Directors of the Fund, including the Independent
Directors, in the manner provided in Section 6.
Amendments to this Plan other than material amendments of the kind
referred to above may be adopted by a vote of the Board of Directors of the
Fund, including the vote of a majority of Independent Directors. The Board of
Directors of the Fund, by such a vote, also may interpret this plan and make all
determinations necessary or advisable for its administration.
Section 12. So long as this Plan is in effect, the selection and
nomination of persons to be directors of the Fund who are not interested persons
(as defined in the Act) of the Fund shall be committed to the discretion of such
disinterested directors then in office.
Section 13. Neither this Plan nor any other transaction between the
parties hereto pursuant to this Plan shall be invalidated or in any way affected
by the fact that any or all of the directors, officers, stockholders, or other
representatives of the Fund are or may be "interested persons" of Lord Abbett,
or any successor or assignee thereof, or that any or all of the directors,
officers, partners, or other representatives of Lord Abbett are or may be
"interested persons" of the Fund, except as otherwise may be provided in the
Act.
Section 14. Lord Abbett shall give the Fund the benefit of Lord
Abbett's best judgment and good faith efforts in rendering services under this
Plan. Other than to abide by the provisions hereof and render the services
called for hereunder in good faith, Lord Abbett assumes no responsibility under
this Plan and, having so acted, Lord Abbett shall not be held liable or held
accountable for any mistake of law or fact, or for any loss or damage arising or
resulting therefrom suffered by the Fund, any Portfolio or any of the
stockholders, creditors, directors, or officers of the Fund; provided, however,
that nothing herein shall be deemed to protect Lord Abbett against any liability
to the Fund or any Portfolio's stockholders by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties hereunder, or by
reason of the reckless disregard of its obligations and duties hereunder.
<PAGE>
Draft 10/10/96
Rule 12b-1 Distribution Plan and Agreement
Lord Abbett Series Fund, Inc. -- Pension Class
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of , 1996 by and
between LORD ABBETT SERIES FUND, INC., a
Maryland Corporation, (the "Fund"), on behalf of its Pension Class (the
"Class"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company
(the "Distributor").
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"); and
the Distributor is the exclusive selling agent of the Fund's shares of
beneficial interest, including the Class pursuant to the Distribution Agreement
between the Fund and the Distributor, dated as of the date hereof, and
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement
(the "Plan") for the Class with the Distributor, as permitted by Rule 12b-1
under the Act, pursuant to which the Class may make certain payments to the
Distributor for payment to institutions and persons permitted by applicable law
and/or rules to receive such payments ("Authorized Institutions") in connection
with sales of Shares and for use by the Distributor as provided in paragraph 3
of this Plan, and
WHEREAS, the Fund's Board of Directors has determined that there is a
reasonable likelihood that the Plan will benefit the Class and the holders of
the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other
good and valuable consideration, receipt of which is hereby acknowledged, it is
agreed as follows:
1. The Fund hereby authorizes the Distributor to enter into agreements
with Authorized Institutions (the "Agreements") which may provide for the
payment to such Authorized Institutions of distribution and service fees which
the Distributor receives from the Class in order to provide incentives to such
Authorized Institutions (i) to sell Shares and (ii) to provide continuing
information and investment services to their accounts holding Shares and
otherwise to encourage their accounts to remain invested in the Shares. The
Distributor may, from time to time, waive or defer payment of some fees payable
at the time of the sale of Shares provided for under paragraph 2 hereof.
2. Subject to possible reduction as provided below in this
paragraph 2, the Class shall pay to the Distributor fees at each
<PAGE>
quarter-end (a) for services, at an annual rate not to exceed .25 of 1% of the
average annual net asset value of Shares outstanding for the quarter or more and
(b) for distribution, at an annual rate not to exceed .50 of 1% of the average
annual net asset value of Shares outstanding for the quarter or more. For
purposes of the quarter-end fee payments above, (A) Shares issued pursuant to an
exchange for shares of another series of the Fund or another Lord
Abbett-sponsored fund (or for shares of a fund acquired by the Fund) will be
credited with the time held from the initial purchase of such other shares when
determining how long Shares mentioned in clauses (a) and (b) have been
outstanding and (B) payments will be based on Shares outstanding during any such
quarter. Shares outstanding in clause (a) and (b) above include Shares issued
for reinvested dividends and distributions which have been outstanding for the
quarter or more.
The Board of Directors of the Fund shall from time to time determine
the amounts and the time of payments (such as, at the time of sale, quarterly or
otherwise), within the foregoing maximum amounts, that the Class may pay the
Distributor hereunder. Such determinations by the Board of Directors shall be
made by votes of the kind referred to in paragraph 10 of this Plan. The service
fees mentioned in this paragraph are for the purposes mentioned in clause (ii)
of paragraph 1 of this Plan and the distribution fees mentioned in this
paragraph are for the purposes mentioned in clause (i) of paragraph 1 and the
second sentence of paragraph 3 of this Plan. The Distributor will monitor the
payments hereunder and shall reduce such payments or take such other steps as
may be necessary to assure that (x) the payments pursuant to this Plan shall be
consistent with Rule 2830, subparagraphs (d)(2) and (5) of the Conducts Rules of
the National Association of Securities Dealers, Inc. with respect to investment
companies with asset-based sales charges and service fees as the same may be in
effect from time to time and (y) the Class shall not pay with respect to any
Authorized Institution service fees equal to more than .25 of 1% of the average
annual net asset value of Shares sold by (or attributable to shares sold by)
such Authorized Institution and held in an account covered by an Agreement.
3. Within the foregoing maximum amounts, the Distributor may use amounts
received as distribution fees hereunder from the Class to finance any activity
which is primarily intended to result in the sale of Shares including, but not
limited to, commissions or other payments relating to selling or servicing
efforts. Without limiting the generality of the foregoing, the Distributor may
apply amounts authorized by the Fund's Board of Directors designated as the
distribution fee referred to in clause (b) of paragraph 2 to expenses incurred
by the Distributor if such expenses are primarily intended to result in the sale
of Shares. The Fund's Board of
<PAGE>
Directors (in the manner contemplated in paragraph 10 of this Plan) shall
approve the timing, categories and calculation of any payments under this
paragraph 3 other than those referred to in the foregoing sentence.
4. The net asset value of the Shares shall be determined as provided in
the Articles of Incorporation of the Fund. If the Distributor waives all or a
portion of fees which are to be paid by the Class hereunder, the Distributor
shall not be deemed to have waived its rights under this Agreement to have the
Class pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial
Officer, is hereby authorized to direct the disposition of monies paid or
payable by the Class hereunder and shall provide to the Fund's Board of
Directors, and the Board of Directors shall review, at least quarterly, a
written report of the amounts so expended pursuant to this Plan and the purposes
for which such expenditures were made.
6. Neither this Plan nor any other transaction between the parties
hereto pursuant to this Plan shall be invalidated or in any way affected by the
fact that any or all of the directors, officers, shareholders, or other
representatives of the Fund are or may be "interested persons" of the
Distributor, or any successor or assignee thereof, or that any or all of the
directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as otherwise
may be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's
best judgment and good faith efforts in rendering services under this Plan.
Other than to abide by the provisions hereof and render the services called for
hereunder in good faith, the Distributor assumes no responsibility under this
Plan and, having so acted, the Distributor shall not be held liable or held
accountable for any mistake of law or fact, or for any loss or damage arising or
resulting therefrom suffered by the Fund, the Class or any of the shareholders,
creditors, directors or officers of the Fund; provided however, that nothing
herein shall be deemed to protect the Distributor against any liability to the
Fund or the Class' shareholders by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder, or by reason of the
reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective on the date hereof, and shall
continue in effect for a period of more than one year from such date only so
long as such continuance is specifically approved at least annually by a vote of
the Board of Directors of the Fund,
<PAGE>
including the vote of a majority of the trustees who are not "interested
persons" of the Fund and who have no direct or indirect financial interest in
the operation of this Plan or in any agreement related to this Plan, cast in
person at a meeting called for the purpose of voting on such renewal.
9. This Plan may not be amended to increase materially the amount to be
spent by the Class hereunder without the vote of a majority of its outstanding
voting securities and each material amendment must be approved by a vote of the
Board of Directors of the Fund, including the vote of a majority of the trustees
who are not "interested persons" of the Fund and who have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
this Plan, cast in person at a meeting called for the purpose of voting on such
amendment.
10. Amendments to this Plan other than material amendments of the kind
referred to in the foregoing paragraph 9 of this Plan may be adopted by a vote
of the Board of Directors of the Fund, including the vote of a majority of the
trustees who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan. The Board of Directors of the Fund may, by such a vote,
interpret this Plan and make all determinations necessary or advisable for its
administration.
11. This Plan may be terminated at any time without the payment of any
penalty by (a) the vote of a majority of the trustees of the Fund who are not
"interested persons" of the Fund and have no trustees or indirect financial
interest in the operation of this Plan or in any agreement related to this Plan,
or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under
the Act as in effect at such time.
12. So long as this Plan shall remain in effect, the selection and
nomination of those trustees of the Fund who are not "interested persons" of the
Fund are committed to the discretion of such disinterested trustees. The terms
"interested persons," "assignment" and "vote of a majority of the outstanding
voting securities" shall have the same meaning as those terms are defined in the
Act.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and on its behalf by its duly authorized representative
as of the date first above written.
LORD ABBETT SERIES FUND, INC.
By:
President
ATTEST:
/s/ Thomas F. Konop
Assistant Secretary
LORD ABBETT DISTRIBUTOR LLC
By:
<PAGE>
draft 10/25/96
Amended and Restated Plans as of October__,1996
Pursuant to Rule 18f-3(d)
under the Investment Company Act of 1940
(AS ADOPTED AUGUST 15, 1996)
Rule 18f-3 (the "Rule") under the Investment Company Act of
1940, as amended (the "1940 Act"), requires that the Board of Directors or
Trustees of an investment company desiring to offer multiple classes pursuant to
the Rule adopt a plan setting forth the separate arrangement and expense
allocation of each class, and any related conversion features or exchange
privileges. This document constitutes an amended and restated plan
(individually, a "Plan" and collectively, the "Plans") of each of the investment
companies, or series thereof, listed on Schedule A attached hereto (each, a
"Fund"). The Plan of any Fund is subject to amendment by action of the Board of
Directors or Trustees (the "Board") of such Fund and without the approval of
shareholders of any class, to the extent permitted by law and by the governing
documents of such Fund.
The Board, including a majority of the non-interested Board members, has
determined that the following separate arrangement and expense allocation, and
the related conversion features, if any, and exchange privileges, of each class
of each Fund are in the best interest of each class of each Fund individually
and each Fund as a whole.
1. CLASS DESIGNATION. Shares of all Funds except Lord
1
<PAGE>
Abbett Series Fund, Inc. shall be divided into Class A shares, Class B
shares and Class C shares as indicated for each Fund on Schedule A
attached hereito. In the case of the Lord Abbett Series Fund - Growth
& Income Portfolio, shares shall be divided into Variable Contract
Class shares and Pension Class shares as indicated on Schedule A.
2. SALES CHARGES AND DISTRIBUTION AND SERVICE FEES.
(a) INITIAL SALES CHARGE. Class A shares will be traditional front-end
sales charge shares, offered at their net asset value ("NAV") plus a sales
charge in the case of each Fund as described in such Fund's prospectus as from
time to time in effect.
Class B shares, Class C shares, Variable Contract Class shares and Pension
Class shares will be offered at their NAV with out an initial sales charge.
(b) SERVICE AND DISTRIBUTION FEES. In respect of the Class A
shares, Class B shares, Class C shares, Variable Contract Class shares and
Pension Class shares, each Fund will pay service and/or distribution fees under
plans from time to time in effect adopted for such classes pursuant to Rule
12b-1 under the 1940 Act (each, a "12b-1 Plan").
Pursuant to a 12b-1 Plan with respect to the Class A shares, if effective,
each Fund will generally pay (I) at the time such shares are sold, a one-time
distribution fee of up to 1% of the NAV of the shares sold in the amount of $1
million or more, including sales qualifying at such level under the rights of
accumulation and statement of intention privileges, or to
2
<PAGE>
retirement plans with 100 or more eligible employees, as described in the Fund's
prospectus as from time to time in effect, (II) a continuing distribution fee at
an annual rate of 0.10% of the average daily NAV of the Class A share accounts
of dealers who meet certain sales and redemption criteria, and (III) a
continuing service fee at an annual rate not to exceed 0.25% of the average
daily NAV of the Class A shares. The Board will have the authority to increase
the distribution fees payable under such 12b-1 Plan by a vote of the Board,
including a majority of the independent directors thereof, up to an annual rate
of 0.25% of the average daily NAV of the Class A shares. The effective dates of
various of the 12b-1 Plans for the Class A shares are based on achievement by
the Funds of specified total NAV's for the Class A shares of each Fund.
Pursuant to a 12b-1 Plan with respect to the Class B shares,
if effective, each Fund will generally pay a continuing annual fee of up to 1%
of the average annual NAV of such shares then outstanding (each fee comprising
.25% in service fee and .75% in distribution fee).
Pursuant to a 12b-1 Plan with respect to the Class C shares,
if effective, each Fund will generally pay a one-time service and distribution
fee at the time such shares are sold of up to 1% of their NAV and a continuing
annual fee, commencing 12 months after the first anniversary of such sale, of up
to 1% of the average annual NAV of such shares then outstanding (each fee
3
<PAGE>
comprising .25% in service fees and .75% in distribution fees).
Pursuant to a 12b-1 plan with respect to the Variable
Contract Class, if operational, the Growth & Income Portfolio will generally pay
a continuing annual fee of up to .15% of the average annual NAV of such shares
then outstanding to reimburse an insurance company for its expenditure related
to the distribution of such shares which expenditures are not also reimbursable
pursuant to fees paid under the variable contract issued by such insurance
company.
Pursuant to a 12b-1 Plan with respect to the Pension Class, if
operational, the Growth & Income Portfolio will generally pay a continuing
annual fee of up to .75% of the average annual NAV of such shares then
outstanding (consisting of distribution and service fees, at maximum annual
rates not exceeding 0.50 and 0.25 of 1%, respectively).
(c) CONTINGENT DEFERRED SALES CHARGES ("CDSC"). Subject to
some exceptions, Class A shares subject to the one-time sales distribution fee
of up to 1% under the Rule 12b-1 Plan for the Class A shares will be subject to
a CDSC equal to 1% of the lower of the cost or the NAV of such shares if the
shares are redeemed for cash onI or before the end of the twenty-fourth month
after the month in which the shares were purchaseId.
Class B shares will be subject to a CDSC ranging from 5% to 1%
of the lower of the cost or the NAV of the shares, if the shares are redeemed
for cash before the sixth anniversary of their
4
<PAGE>
purchase. The CDSC for the Class B shares may be waived for
certain transactions.
Class C shares will be subject to a CDSC equal to 1% of the lower of the
cost or the NAV of the shares if the shares are redeemed for cash before the
first anniversary of their purchase. Neither the Variable Contract Class nor the
Pension Class shares will be subject to a CDSC.
3. LIABILITY AND EXPENSE ALLOCATION. The following expenses and liabilities
therefor shall be allocated, to the extent such expenses can reasonably be
identified as relating to a particular class and consistent with Revenue
Procedure 96-47, on a class-specific basis: (a) fees under a 12b-1 Plan
applicable to a specific class (net of any CDSC paid with respect to shares of
such class and retained by the Fund) and any other costs relating to
implementing or amending such Plan, including obtaining shareholder approval of
such Plan or any amendment thereto; (b) transfer and shareholder servicing agent
fees and shareholder servicing costs identifiable as being attributable to the
particular provisions of a specific class; (c) stationery, printing, postage and
delivery expenses related to preparing and distributing materials such as share
holder reports, prospectuses and proxy statements to current shareholders of a
specific class; (d) Blue Sky registration fees incurred by a specific class; (e)
Securities and Exchange Commission registration fees incurred by a specific
class; (f)
5
<PAGE>
Board fees or expenses identifiable as being attributable to a specific
class; (g) fees for outside accountants and related expenses relating
solely to a specific class; (h) litigation expenses and legal fees and
expense relating solely to a specific class; (i) expenses incurred in
connection with shareholders meetings as a result of issues relating
solely to a specific class and (j) other expenses relating solely to a
specific class, provided, that advisory fees and other expenses related
to the management of a Fund's assets (including custodial fees and
tax-return preparation fees) shall be allocated to all shares of such
Fund on the basis of NAV, regardless of whether they can be
specifically attributed to a particular class. All common expenses
shall be allocated to shares of each class at the same time they are
allocated to the shares of all other classes. All such liabilities and
expenses incurred by a class of shares will be charged directly to the
net assets of the particular class and thus will be borne on a pro rata
basis by the outstanding shares of such class.
4. DIVIDENDS. Dividends paid by a Fund on each class of its shares, to the
extent any dividends are paid, will be calculated in the same manner, will be
paid at the same time, and will be in the same amount, except that (A) any
expenses allocated to a class as provided above shall be borne exclusively by
that class and (B) income, realized and
6
<PAGE>
unrealized capital gains and losses and expense not allocated to a class as
provided above shall be allocated to each class on the basis of the net asset
value of that class in relation to the net asset value of the Fund, except that,
in the case of each daily dividend Fund, income and expenses shall be allocated
on the basis of relative net assets (settled shares).
5. NET ASSET VALUES. The NAV of each share of a class of a Fund shall be
determined in accordance with the Articles of Incorporation or Declaration of
Trust of such Fund with appropriate adjustments to reflect the allocations of
expenses, income and realized and unrealized capital gains and losses of such
Fund between or among its classes as provided above.
6. CONVERSION FEATURES. The Class B shares will automatically convert to
Class A shares 8 years after the date of purchase. Such conversion will
occur at the relative NAV per share of each Class without the imposition of
any sales charge, fee or other charge. When Class B shares convert, any
other Class B shares that were acquired by the shareholder by the
reinvestment of dividends and distributions will also convert to Class A
shares on a pro rata basis. The conversion of Class B shares to Class A
shares after 8 years is subject to the continuing availability of a private
letter ruling from the Internal Revenue Service or an opinion of counsel to the
7
<PAGE>
effect that the conversion does not constitute a taxable event for the
Class B shareholder under Federal income tax law. If such a revenue ruling or
opinion is no longer available, the automatic conversion feature may be
suspended, in which event no further conversions of Class B shares would occur
while such suspension remained in effect. Subject to amendment by the Board,
Class A shares and Class C shares shall not be subject to any automatic
conversion feature. 7. EXCHANGE PRIVILEGES. Except as set forth in a Fund's
prospectus as from time to time in effect, shares of any class of such Fund may
be exchanged, at the holder's option, for shares of the same class of another
Fund, or other Lord Abbett-sponsored fund or series thereof, without the
imposition of any sales charge, fee or other charge.
Each Plan is qualified by and subject to the terms of the then current
prospectus for the applicable Fund; provided, however, that none of the terms
set forth in any such prospectus shall be inconsistent with the terms contained
herein. The prospectus for each Fund contains additional information about that
Fund's classes and its multiple-class structure.
Each Plan is being adopted for a Fund with the approval of, and all
material amendments thereto must be approved by, a majority of the Board of such
Fund, including a majority of the Board who are not interested persons of the
Fund.
8
<PAGE>
The Lord Abbett - Sponsored Funds
ESTABLISHING MULTI-CLASS STRUCTURES
CLASSES
Lord Abbett Affiliated Fund, Inc. A, B, C
Lord Abbett Bond-Debenture Fund, Inc. A, B, C
Lord Abbett Developing Growth Fund, Inc. A, B, C
Lord Abbett Global Fund, Inc.
Equity Series A, B, C
Income Series A, B, C
Lord Abbett Investment Trust
Lord Abbett Balanced Series A, C
Lord Abbett Limited Duration U.S.
Government Securities Series A, C
Lord Abbett U.S. Government
Securities Series A, B, C
Lord Abbett Securities Trust
Lord Abbett Growth & Income Trust A, C
Lord Abbett Tax-Free Income Fund, Inc.
California Series A, C
National Series A, B, C
New York Series A, C
Lord Abbett Tax-Free Income Trust
Florida Series A, C
Lord Abbett U.S. Government Securities
Money Market Fund, Inc. A, B, C
Lord Abbett Research Fund, Inc.
Large-Cap Series A, B
Small-Cap Series A, B
Lord Abbett Series Fund
Growth & Income Portfolio Variable Annuity Class
Growth & Income Portfolio Pension Class
9
