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These Terms of Use ("Terms of Use") are made between the undersigned user ("you") and Lord, Abbett & Co. ("we" or "us"). They become effective on the date that you electronically execute these Terms of Use ("Effective Date").

A. You are a successful financial consultant that markets securities, including the Lord Abbett Family of Funds;

B. We have developed the Lord Abbett Intelligence System (the "Intelligence System"), a state of the art information resource that we make available to a limited community of broker/dealers through the Internet at a secure Web site (the "LAIS Site"); and

C. We wish to provide access to the Intelligence System to you as an information tool responsive to the demands of your successful business pursuant to these Terms of Use. Accordingly, you and we, intending to be legally bound, hereby agree as follows:]

1. Overview. · Scope. These Terms of Use (which we may amend from time to time) govern your use of the Intelligence System. · Revisions; Changes. We may amend these Terms of Use at any time by posting amended Terms of Use ("Amended Terms of Use") on the LAIS Site. Any Amended Terms of Use will become effective immediately upon posting. Your use of the Intelligence System after any Amended Terms of Use become effective will be deemed to constitute your acceptance of those Amended Terms of Use.We may modify or discontinue the Intelligence System at any time, temporarily or permanently, with or without notice to you. Purpose of the Intelligence System. The Intelligence System is intended to be an information resource that you may use to contribute to your business research. The Intelligence System is for broker/dealer use only; it is not to be used with the public in oral, written or electronic form. The information on the Intelligence System and LAIS Site is for your information only and is neither the tax, legal or investment advice of Lord Abbett or its third-party sources nor their recommendation to purchase or sell any security.

2. Your Privileges. · Personal Use. Your use of the Intelligence System is a nontransferable privilege granted by us to you and that we may deny, suspend or revoke at any time, with or without cause or notice. · Access to and Use of the Intelligence System. The User ID and password (together, an "Access ID") issued by us to you (as subsequently changed by you from time to time) is for your exclusive access to and use of the Intelligence System. You will: (a) be responsible for the security and use of your Access ID, (b) not disclose your Access ID to anyone and (c) not permit anyone to use your Access ID. Any access or use of the Intelligence System through the use of your Access ID will be deemed to be your actions, for which you will be responsible. · Required Technology. You must provide, at your own cost and expense, the equipment and services necessary to access and use the Intelligence System. At any time, we may change the supporting technology and services necessary to use the Intelligence System. · Availability. We make no guarantee that you will be able to access the Intelligence System at any given time or that your access will be uninterrupted, error-free or free from unauthorized security breaches.

3. Rights in Data. Our use of information collected from you will be in accordance with our Privacy Policy posted on the LAIS Site. Our compliance with our Privacy Policy will survive any termination of these Terms of Use or of your use of the Intelligence System.

4. Your Conduct in the Use of the Intelligence System. You may access, search, view and store a personal copy of the information contained on the LAIS Site for your use as a broker/dealer. Any other use by you of the Intelligence System and the information contained on the LAIS Site these Terms of Use is strictly prohibited. Without limiting the preceding sentence, you will not: · Engage in or permit any reproduction, copying, translation, modification, adaptation, creation of derivative works from, distribution, transmission, transfer, republication, compilation or decompilation, reverse engineering, display, removal or deletion of the Intelligence System, any portion thereof, or any data, content or information provided by us or any of our third-party sources in any form, media or technology now existing or hereafter developed, that is not specifically authorized under these Terms of Use.

· Remove, obscure or alter any notice, disclaimer or other disclosure affixed to or contained within the Intelligence System, including any copyright notice, trademark and other proprietary rights notices and any legal notices regarding the data, content or information provided through the Intelligence System.

· Create a hyperlink to, frame or use framing techniques to enclose any information found anywhere on the LAIS Site without our express prior written consent.

· Impersonate any person, or falsely state or otherwise misrepresent his or her affiliation with any person in connection with any use of the Intelligence System.

· Breach or attempt to breach the security of the Intelligence System or any network, servers, data, or computers or other hardware relating to or used in connection with the Intelligence System; nor (b) use or distribute through the Intelligence System software or other tools or devices designed to interfere with or compromise the privacy, security or use of the Intelligence System by others or the operations or assets of any person.

· Violate any applicable law, including, without limitation, any state federal securities laws. 5. Your Representations and Warranties. You hereby represent and warrant to us, for our benefit, as of the time of these Terms of Use and for so long as you continue to use the Intelligence System, that (a) you are, and will continue to be, in compliance with these Terms of Use and any applicable laws and (b) you are authorized to provide to us the information we collect, as described in our Privacy Policy.

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THE INTELLIGENCE SYSTEM, THE LAIS SITE AND ALL DATA, INFORMATION AND CONTENT ON THE LAIS SITE ARE PROVIDED "AS IS" AND “AS AVAILABLE” AND WITHOUT ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND. WITHOUT LIMITING THE PRECEDING SENTENCE, LORD ABBETT, ITS AFFILIATES, AGENTS, THIRD-PARTY SUPPLIERS AND LICENSORS, AND THEIR RESPECTIVE EMPLOYEES, CONTRACTORS, DIRECTORS, OFFICERS AND SHAREHOLDERS (COLLECTIVELY, THE “LORD ABBETT GROUP”) EXPRESSLY DISCLAIM ALL WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND NONINFRINGEMENT. YOU EXPRESSLY AGREE THAT YOUR USE OF THE LAIS SITE, THE INTELLIGENCE SYSTEM, AND THE DATA, INFORMATION AND CONTENT PRESENTED THERE ARE AT YOUR SOLE RISK AND THAT THE LORD ABBETT GROUP WILL NOT BE RESPONSIBLE FOR ANY (A) ERRORS OR INACCURACIES IN THE DATA, CONTENT AND INFORMATION ON THE LAIS SITE AND THE INTELLIGENCE SYSTEM OR (B) ANY TERMINATION, SUSPENSION, INTERRUPTION OF SERVICES, OR DELAYS IN THE OPERATION OF THE LAIS SITE OR THE INTELLIGENCE SYSTEM.

· Disclaimer Regarding Investment Research.

THE INTELLIGENCE SYSTEM INCORPORATES DATA, CONTENT AND INFORMATION FROM VARIOUS SOURCES THAT WE BELIEVE TO BE ACCURATE AND RELIABLE. HOWEVER, THE LORD ABBETT GROUP MAKES NO CLAIMS, REPRESENTATIONS OR WARRANTIES AS TO THE ACCURACY, TIMELINESS, COMPLETENESS OR TRUTHFULNESS OF SUCH DATA, CONTENT AND INFORMATION. YOU EXPRESSLY AGREE THAT YOU ARE RESPONSIBLE FOR INDEPENDENTLY VERIFYING YOUR INVESTMENT RESEARCH PRIOR TO FORMING YOUR INVESTMENT DECISIONS OR RENDERING INVESTMENT ADVICE. THE LORD ABBETT GROUP WILL NOT BE LIABLE FOR ANY INVESTMENT DECISION MADE BY YOU OR ANY OTHER PERSON BASED UPON THE DATA, CONTENT AND INFORMATION PROVIDED THROUGH THE INTELLIGENCE SYSTEM OR ON THE LAIS SITE.

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THIS SECTION 6 SHALL SURVIVE ANY TERMINATION OF THESE TERMS OF USE OR YOUR USE OF THE INTELLIGENCE SYSTEM..

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NONE OF THE MEMBERS OF THE LORD ABBETT GROUP WILL BE LIABLE TO YOU OR ANY OTHER PERSON FOR ANY DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, SPECIAL OR EXEMPLARY DAMAGES (INCLUDING LOSS OF PROFITS, LOSS OF USE, TRANSACTION LOSSES, OPPORTUNITY COSTS, LOSS OF DATA, OR INTERRUPTION OF BUSINESS) RESULTING FROM, ARISING OUT OF OR IN ANY WAY RELATING TO THE INTELLIGENCE SYSTEM, THE LAIS SITE OR YOUR USE THEREOF, EVEN IF THE LORD ABBETT GROUP HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS SECTION 7 WILL SURVIVE ANY TERMINATION OF THESE TERMS OF USE OR YOUR USE OF THE INTELLIGENCE SYSTEM.

8. Miscellaneous Provisions.

· Governing Law. This Agreement will governed by and construed in accordance with the laws of the State of New York, without giving effect to applicable conflicts of law principles.

THE UNIFORM COMPUTER INFORMATION TRANSACTIONS ACT OR ANY VERSION THEREOF, ADOPTED BY ANY STATE, IN ANY FORM ("UCITA") WILL NOT APPLY TO THESE TERMS OF USE. TO THE EXTENT THAT UCITA IS APPLICABLE, THE PARTIES HEREBY AGREE TO OPT OUT OF THE APPLICABILITY OF UCITA PURSUANT TO THE OPT-OUT PROVISION(S) CONTAINED THEREIN.

The Intelligence System is not intended to be used by consumers, nor are the consumer protection laws of any jurisdiction intended to apply to the Intelligence System. You agree to initiate and maintain any action, suit or proceeding relating to these Terms of Use or arising out of the use of the Intelligence System exclusively in the courts, state and federal, located in or having jurisdiction over New York County, New York.

YOU HEREBY CONSENT TO THE PERSONAL JURISDICTION AND VENUE OF THE COURTS, STATE AND FEDERAL, LOCATED IN OR HAVING JURISDICTION OVER NEW YORK COUNTY, NEW YORK. YOU AGREE THAT YOU WILL NOT OBJECT TO A PROCEEDING BROUGHT IN YOUR LOCAL JURISDICTION TO ENFORCE AN ORDER OR JUDGMENT OBTAINED IN NEW YORK.

· Relationship of Parties. The parties to these Terms of Use are independent contractors and nothing in these Terms of Use will be construed as creating an employment relationship, joint venture, partnership, agency or fiduciary relationship between the parties.

· Notice. All notices provided under these Terms of Use will be in writing and will be deemed effective: (a) when delivered personally, (b) when received by electronic delivery, (c) one business day after deposit with a commercial overnight carrier specifying next day delivery, with written verification of receipt, or (d) three business days after having been sent by registered or certified mail, return receipt requested. We will only accept notices from you in English and by conventional mail addressed to: General Counsel Lord, Abbett & Co. 90 Hudson Street Jersey City, N.J. 07302-3973 We may give you notice by conventional mail or electronic mail addressed to the last mail or electronic mail address transmitted by you to us.

· Third-Party Beneficiaries. The members of the Lord Abbett Group are third-party beneficiaries of the rights and benefits provided to us under these Terms of Use. You understand and agree that any right or benefit available to us or any member of the Lord Abbett Group hereunder will also be deemed to accrue to the benefit of, and may be exercised directly by, any member of the Lord Abbett Group to the extent applicable.

· Survival. This Section 8 will survive any termination of these Terms of Use or your use of the Intelligence System. The undersigned hereby signs these Terms of Use. By electronically signing and clicking "Accept" below, these Terms of Use will be legally binding on me. To sign these Terms of Use, confirm your full name and enter your User ID and Password (as your electronic signature) in the fields indicated below and click the “I Accept” button.

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Economic Insights

The fiscal health of state and local governments appears robust when compared with that of the federal government.

State and local government finances appear to have stabilized. No one could describe them as sound, in aggregate and certainly not in certain particulars, but they have stabilized in general. The sector as a whole continues to run deficits, of course, and there are many pressure points on the expenditures side of state and local government budgets. But these governments have kept spending growth in line with revenues growth and, so, have contained the flow of red ink. There also is the likelihood of such continued relative stability going forward, even in the country’s slow-growth economic environment. This is good news, even with all the caveats. There are, however, longer-term concerns.

A Look at Where We Have Been
State and local government finances have faced a tough pull back from the great recession of 2008–09. Quite apart from the pension issues that have garnered so much media attention, those economic hard times hit state and local budgets from both sides. Revenues fell as the economic downturn dragged down just about every tax line item. Between the fourth quarter of 2007 and the second quarter of 2009, personal income tax receipts fell 7.2%, sales tax receipts fell 7.7%, and corporate tax receipts fell 24.4%. Ironically, given the real estate roots of the recession, the only revenue item to rise was property taxes, which expanded 6.1%, largely because these flows reflected prior strength.1     

Against this difficult shortfall in receipts, the recession produced outsized demands for spending on social services. State and local outlays in this area jumped 13.8% between the fourth quarter of 2007 and the third quarter of 2009, when this particular pressure began to ease. As a consequence, overall state and local expenditures expanded 10.4% during that time. It is hardly surprising, then, that state and local budget deficits rose, from an annual rate of $205.2 billion in the fourth quarter of 2007 to $377 billion by the middle of 2009, an 83.9% increase that raised the deficit, from 9.4% of total expenditures to 16%.

Following the devastating effects of the recession, the sluggish nature of this recovery has capped the growth of state and local receipts since. Between mid-2009 and the end of 2012, those receipts grew only 10.1%, or a mere 2.8% a year. Like incomes throughout the economy, this pace of expansion barely exceeded inflation. The recovery did, however, enable state and local governments as a whole to regain control of their outlays. Though substandard by historical standards, the pace of economic growth slowed demands for social benefits, keeping growth in this expenditure line item to 2.7% a year. This moderation, plus budget cuts elsewhere, enabled governors, mayors, and local managers to hold the pace of overall spending to a mere 0.8% a year, thereby stemming the tide of red ink, so that by the close of 2012, state and local deficits as a whole equaled $269.1 billion a year, about 10.0% of overall expenditures.

Since then, these governments have eased off a bit on their austerity efforts. Their receipts have continued to grow at the slow 2.8% annual pace they set earlier in the expansion. Because outlays for social benefits have continued to rise faster than revenues—at a 5.9% annual rate in fact—these governments have had to continue squeezing the rest of their budgets to contain the growth in total outlays to 2.5% a year. That figure is faster than earlier in the recovery, but still slow and close enough to revenues growth to have held back the annual flow of red ink, which, as of the first half of 2014, stood at $259.7 billion a year, a touch over 10.0% of total expenditures.

Looking Forward  
For the time being—a horizon of two to three years—likelihoods favor a continuation of this contained trend. A slow-growing economy should promote some growth in state and local revenues, but, as during the past few years of recovery, not much faster than the rate of inflation. With little sign of an acceleration in the economy, there is little chance of revenue growth exceeding 3.0% by much. At the same time, the limited chance of recession removes much risk of an outright decline in revenues, certainly not on the scale that occurred during 2008–09. Given political pressure to sustain some budget control and concern about how investors would react to widening deficits, governments should also continue to manage the pace of growth in outlays at about the rate of revenues growth, keeping a lid on the growth of red ink to about 10–10.5% of total expenditures.  

Though this pattern can last for a while, it is, however, unsustainable over the longer term. Except in the unlikely event that the economy gets a whole lot better quickly, the pace of growth in spending on social benefits will continue to outstrip revenues growth, as it has so far in this sluggish recovery. The recent growth rate of 5.9% is entirely plausible. An improvement in the jobs market, even a modest improvement, would tend to slow the pace, but against that, the further implementation of the Affordable Care Act threatens to add to the figure. The longer this goes on, the harder time state and local governments will have squeezing other parts of their budgets to keep the overall pace of outlays growth in line with revenues. Unless, then, there is some action to address this pressure, state and local finances over the longer term will again come under renewed, severe pressure.  

There is another risk for the longer-term outlook, and that is a rise in interest rates. The budget burden of financing has fallen as a part of total outlays, from 8.3% at the end of 2009 to 7.8% recently. Part of the decline reflects the success state and local governments have had keeping a lid on the flow of red ink. Part of it also reflects the remarkably low level of interest rates during this time. Over the long term, however, interest rates are very likely to come under upward pressure. Because municipal yields and rates at present (though low by historical standards) are high relative to Treasury and corporate yields and rates, they likely will resist any initial up move in yields and rates generally. Eventually, however, they will succumb to any general move upward. When that happens, state and local governments will have to pay more for financing, burdening their budgets further. So, unless they can indefinitely squeeze those other parts of their budgets they have shortchanged since this recovery began—a doubtful possibility—their deficits will tend to rise.          

These pressures seem unavoidable. An economic acceleration could, of course, relieve the strain by accelerating the growth of state and local receipts; but, as indicated, that looks unlikely right now. The budget pressure on this more distant horizon will, doubtlessly, create a concomitant political pressure for further reform in state and local financing. Should that reform prove effective, it could improve finances over the longer term and the security of municipal bond investments with it. A failure to reform over this longer time horizon or ineffective reforms would make matters less secure. Even in this case, however, the fears of investment loss, which surely would accompany such pressure, will almost surely overstate the risk. Since most of these governments know how much future financing depends on a reliable discharge of their debt obligations, they will squeeze a good deal else in their budgets, including social benefits, to avoid reneging on their bond obligations in any way.  

 

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