<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
The Zweig Total Return Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
THE ZWEIG TOTAL RETURN FUND, INC.
900 THIRD AVENUE, NEW YORK, NEW YORK 10022
January __, 1999
DEAR SHAREHOLDER:
We are pleased to announce that the equityholders of Zweig Total Return
Advisors, Inc., which is the investment adviser to The Zweig Total Return Fund,
Inc. (the "Fund"), and Zweig/Glaser Advisers, which is the administrator of the
Fund, have entered into an agreement to sell their equity interests to Phoenix
Investment Partners, Ltd., a large, diversified financial services organization
which is a 60%-owned indirect subsidiary of Phoenix Home Life Mutual Insurance
Company.
A Special Meeting of Shareholders will be held on Thursday, February
25, 1999 at 2:30 p.m. at the offices of Rosenman & Colin LLP, 575 Madison
Avenue, 11th Floor, New York, New York 10022. The sole purpose of the Special
Meeting will be to effectively vote on the sale by approving a new investment
advisory agreement with Zweig Total Return Advisors, Inc. and a new servicing
agreement for the rendering of sub-advisory services with Zweig Consulting LLC,
which is owned and operated by persons who currently are providing certain
advisory services to Zweig Total Return Advisors, Inc.
It is not expected that the sale or the new advisory agreements will
have any effect upon the investment policies of the Fund or its 10% monthly
distribution policy.
Your vote is important. Please take a moment now to vote your shares
either electronically, by touch-tone telephone, or by signing and returning your
proxy card in the enclosed postage-paid envelope. If we do not hear from you
after a reasonable amount of time, you may receive a telephone call from our
proxy solicitor Shareholder Communications Corporation, reminding you to vote
your shares. If you have any questions concerning the proposal to be considered
at the Special Meeting, please contact ________________________________________
at 1-800-___-_____. Thank you.
MARTIN E. ZWEIG,
Chairman of the Board
and President
<PAGE> 3
THE ZWEIG TOTAL RETURN FUND, INC.
900 THIRD AVENUE, NEW YORK, NEW YORK 10022
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 25, 1999
TO THE SHAREHOLDERS:
A Special Meeting of Shareholders of The Zweig Total Return Fund, Inc.,
a Maryland corporation (the "Fund"), will be held on Thursday, February 25, 1999
at 2:30 p.m. at the offices of Rosenman & Colin LLP, 575 Madison Avenue, 11th
Floor, New York, New York 10022, for the following purposes:
(1) To approve a new investment advisory agreement with
Zweig Total Return Advisors, Inc., which will be on
substantially the same terms as the current
investment advisory agreement, except that it will
provide that Zweig Total Return Advisors, Inc. may
retain sub-advisors, and a new servicing agreement
for the rendering of sub-advisory services with Zweig
Consulting LLC; and
(2) To transact such other business as may properly come
before the Meeting or any adjournments thereof.
Shareholders of record as of the close of business on January 7, 1999
are entitled to notice of and will be entitled to vote at the Meeting and at any
and all adjournments thereof.
By Order of the Board of Directors
MARTIN E. ZWEIG,
Chairman of the Board
New York, New York
January __, 1999
IMPORTANT:
YOU ARE INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON, YOU ARE REQUESTED TO VOTE EITHER BY ELECTRONIC MEANS, BY
TOUCH-TONE TELEPHONE, OR BY COMPLETING, DATING AND SIGNING THE ENCLOSED PROXY
CARD AND RETURNING IT PROMPTLY IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED
FOR YOUR CONVENIENCE AND REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
YOUR PROMPT VOTE MAY SAVE THE FUND THE NECESSITY AND EXPENSE OF FURTHER
SOLICITATIONS TO ASSURE A QUORUM AT THE MEETING. A PROXY WILL NOT BE REQUIRED
FOR ADMISSION TO THE MEETING.
<PAGE> 4
PRELIMINARY PROXY STATEMENT
[This document describes certain matters which have not yet occurred.]
THE ZWEIG TOTAL RETURN FUND, INC.
900 THIRD AVENUE, NEW YORK, NEW YORK 10022
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 25, 1999
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of The Zweig Total Return Fund,
Inc., a Maryland corporation (the "Fund"), for use at a Special Meeting of
Shareholders to be held at the offices of Rosenman & Colin LLP, 575 Madison
Avenue, 11th Floor, New York, New York 10022, on Thursday, February 25, 1999 at
2:30 p.m., and at any and all adjournments thereof, for the purposes set forth
in the accompanying Notice of Special Meeting dated January __, 1999.
If the accompanying form of proxy is properly executed and returned in
time to be voted at the Meeting, the shares will be voted in accordance with the
instructions marked by the shareholder. Executed proxies that are unmarked will
be voted FOR the approval of the new investment advisory agreement with Zweig
Total Return Advisors, Inc. (the "Investment Adviser") and the new servicing
agreement for the rendering of sub-advisory services with Zweig Consulting LLC
(the "Sub-Adviser"). A shareholder can revoke the proxy prior to its use by
appearing at the Meeting and voting in person, by giving written notice of such
revocation to the Secretary of the Fund, or by returning a subsequently dated
proxy.
The Board of Directors has fixed the close of business on January 7,
1999 as the record date for the determination of shareholders entitled to notice
of and to vote at the Meeting. As of the record date, 89,770,539 shares of the
Fund's common stock were outstanding.
If you have any questions concerning the proposal to be considered at
the Special Meeting, please contact ________________________________________ at
1-800-___-_____.
The Fund will furnish, without charge, another copy of the Fund's
Annual Report for the fiscal year ended December 31, 1997 and the Fund's
semi-annual report for the 6-month period ended June 30, 1998 to any shareholder
who requests it by contacting Zweig/Glaser Advisers, 900 Third Avenue, New York,
New York 10022, Attention: Shareholder Services (toll-free telephone number:
(800) 272-2700).
This Proxy Statement and the accompanying form of proxy will be first
sent to shareholders on or about January __, 1999.
<PAGE> 5
SECURITY OWNERSHIP OF
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding shares of
the Fund's common stock beneficially owned as of December 31, 1998 by each of
the Fund's Directors and executive officers. The Fund's Directors and executive
officers as a group beneficially owned as of such date less than 1/2 of 1% of
the outstanding shares of the Fund's common stock. To the best of the Fund's
knowledge, no person beneficially owned more than 5% of the outstanding shares
of the Fund's common stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH THE FUND NUMBER OF SHARES(1)
- ---------------- ---------------------- -------------------
<S> <C> <C>
Martin E. Zweig Chairman of the Board and 72,073 (2)(3)*
900 Third Avenue President
New York, NY 10022
Charles H. Brunie Director 14,251
21 Elm Rock Road
Bronxville, NY 10708
Annemarie Gilly Director 225 (4)*
900 Third Avenue
New York, NY 10022
Eugene J. Glaser Director 3,447 (4)*
900 Third Avenue
New York, NY 10022
Elliot S. Jaffe Director 1,000
30 Dunnigan Drive
Suffern, NY 10901
Jeffrey Lazar Director, Vice President and 7,365 (4)(5)*
900 Third Avenue Treasurer
New York, NY 10022
Alden C. Olson Director 2,000
2711 Ramparte Path
Holt, Michigan 48842
James B. Rogers, Jr. Director 1,563
352 Riverside Drive
New York, NY 10025
Anthony M. Santomero Director 2,000
Steinberg-Dietrich Hall
Wharton School
University of Pennsylvania
Philadelphia, PA 19104
Robert E. Smith Director 1,142 (4)*
575 Madison Avenue
New York, NY 10022
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH THE FUND NUMBER OF SHARES(1)
- ---------------- ---------------------- -------------------
<S> <C> <C>
Stuart B. Panish Vice President 379
900 Third Avenue and Secretary
New York, NY 10022
All Directors and Executive Officers as 105,445
a group
</TABLE>
- ----------------
* Directors considered to be "Interested Persons," as that term is
defined in the Investment Company Act of 1940. Dr. Zweig is considered an
interested person of the Fund and the Investment Adviser because, among other
things, he is an officer and director of the Fund and the Investment Adviser and
owns 50.85% of the outstanding common stock of the Investment Adviser and also
because of his ownership of 50% of the outstanding common stock of Zweig
Securities Corp., a broker-dealer registered under the Securities Exchange Act
of 1934. Mr. Smith is considered an interested person of the Fund and the
Investment Adviser because he is Counsel of the law firm that acts as legal
counsel to the Fund and the Investment Adviser. Mr. Glaser is considered an
interested person of the Fund and the Investment Adviser because of his
ownership of 9.99% of the outstanding common stock of the Investment Adviser and
also because he is the President and the owner of 50% of the outstanding common
stock of Zweig Securities Corp. Ms. Gilly is considered an interested person of
the Fund and the Investment Adviser because of her affiliation with Zweig
Securities Corp. Mr. Lazar is considered an interested person of the Fund and
the Investment Adviser because he is an officer of the Fund and the Investment
Adviser. In September 1998, Dr. Zweig sold 5.0295 shares of the Investment
Adviser's common stock, representing 5.0295% of the Investment Adviser's
outstanding common stock, to various employees of the Investment Adviser and its
affiliates for the aggregate sum of $610,246.03.
(1) The information as to beneficial ownership is based on statements
furnished to the Fund by the Directors and executive officers and may not
include shares acquired pursuant to the Fund's Distribution Reinvestment and
Cash Purchase Plan during the fiscal year ended December 31, 1998. Except as
otherwise indicated, each person has sole voting and investment power with
respect to the shares listed as owned by him or her. Fractional shares are
rounded off to the nearest whole share.
(2) Includes 45,081 shares owned by an affiliate, as to which he has
shared voting and investment power.
(3) Includes 695 shares owned by Dr. Zweig's individual retirement
account, as to which he has sole voting and investment power.
(4) In order to comply with certain requirements of the Investment
Company Act of 1940 relating to the post-Acquisition composition of the Fund's
Board of Directors, following the consummation of the Acquisition, Mr. Glaser,
Ms. Gilly, Mr. Lazar and Mr. Smith will not continue as Directors of the Fund.
See "Investment Company Act Considerations" below.
(5) Includes 480 shares owned by Mr. Lazar's individual retirement
account, as to which he has sole voting and investment power.
3
<PAGE> 7
PROPOSAL
APPROVAL OF THE NEW INVESTMENT ADVISORY AND SERVICING AGREEMENTS
BACKGROUND
The Investment Adviser is the current investment adviser to the Fund
and Zweig/Glaser Advisers (the "Administrator") is the current administrator of
the Fund. Phoenix Investment Partners, Ltd. ("Phoenix"), a Delaware corporation,
has entered into an agreement (the "Acquisition Agreement") with the Investment
Adviser, the Administrator, Euclid Advisors LLC, Zweig Advisors Inc., Zweig
Securities Corp. (collectively, the "Zweig Group") and equityholders of the
Zweig Group. Pursuant to the Acquisition Agreement, the Zweig Group will be
acquired by Phoenix (the "Acquisition").
Phoenix is a large, diversified financial services organization which
is a 60%-owned indirect subsidiary of Phoenix Home Life Mutual Insurance
Company. Through its operating subsidiaries and affiliates, Phoenix provides a
variety of investment products and services to investors throughout the United
States and abroad. Phoenix provides management, administrative and distribution
services for 54 mutual funds, as well as individual and institutional clients.
As of December 31, 1998, Phoenix had over $51 billion in assets under
management. The Phoenix mutual funds are distributed through a network of
broker-dealers, financial planners and investment advisers. Phoenix is
headquartered in Hartford, Connecticut, and its common stock is listed on the
New York Stock Exchange (symbol: PXP).
Consummation of the Acquisition would constitute an "assignment," as
that term is defined in the Investment Company Act of 1940 (the "1940 Act"), of
the current investment advisory agreement with the Investment Adviser. As
required by the 1940 Act, the current investment advisory agreement provides for
its automatic termination in the event of its assignment. In anticipation of the
acquisition of the Investment Adviser, and in order to ensure that the
Investment Adviser can continue to serve as investment adviser to the Fund, a
new investment advisory agreement with the Investment Adviser (the "Investment
Advisory Agreement") is being proposed for approval by shareholders of the Fund,
which will be on substantially the same terms as the current investment advisory
agreement, except that it will provide that the Investment Adviser may retain
sub-advisors. Also, a new servicing agreement for the rendering of sub-advisory
services with the Sub-Adviser (the "Servicing Agreement") is being proposed for
approval by the shareholders of the Fund. The Sub-Adviser is owned and operated
by persons who are currently providing advisory services to the Investment
Adviser. Copies of the Investment Advisory Agreement and Servicing Agreement are
attached hereto as Exhibits A and B.
INVESTMENT ADVISORY AGREEMENT
The current investment advisory agreement, dated September 22, 1988,
was initially approved by the Fund's shareholders on May 10, 1989, and was most
recently approved by the Fund's Board of Directors on September 10, 1998. The
proposed new Investment Advisory Agreement would be entered into and take effect
upon consummation of the Acquisition and will be on substantially the same terms
as the current agreement. However, in order to authorize the Investment Adviser
to enter into the proposed new servicing agreement for the rendering of
sub-advisory services to it by the Sub-Adviser (see "Servicing Agreement"), a
new provision has been added to authorize the Investment Adviser to employ,
retain or otherwise avail itself of the services of other persons or
organizations for the purpose of providing it or the Fund with any or all of the
services that the Investment Adviser is required to provide to the Fund
thereunder.
Under the Investment Advisory Agreement, the Investment Adviser is
responsible for the management of the Fund's portfolio. The responsibility for
making decisions to buy, sell or hold a particular investment rests with the
Investment Adviser, subject to review by the Board of Directors and the
applicable provisions of the 1940 Act. The Investment Adviser is also obligated
to provide the Fund
4
<PAGE> 8
with such executive, data processing, clerical, accounting and bookkeeping
services and statistical and research data as are deemed advisable by the Fund's
Board of Directors, except to the extent these services are provided by an
administrator hired by the Fund.
For the services provided by the Investment Adviser under the
Investment Advisory Agreement, the Fund will pay the Investment Adviser a
monthly fee computed at the annual rate of 0.70% of the average daily value of
the Fund's net assets during the previous month. For the fiscal year ended
December 31, 1998, the Fund accrued investment advisory fees to the Investment
Adviser of $ _________. In addition, the Fund paid brokerage commissions for
portfolio transactions to Zweig Securities Corp. (which may be deemed to be an
affiliate of the Investment Adviser) of $ _________, and paid brokerage
commissions to Zweig Securities Corp. for trading effected on behalf of
participants in the Fund's Distribution Reinvestment and Cash Purchase Plan of $
_________ for the fiscal year ended December 31, 1998. The Fund also accrued
fees to the Administrator for administrative services. See "Administrative
Services" below.
Zweig Securities Corp. or any other brokerage affiliate (the "Brokerage
Affiliate") may act as a broker for the Fund. In order for the Brokerage
Affiliate to effect any portfolio transactions for the Fund, the commissions,
fees or other remuneration received by the Brokerage Affiliate must be
reasonable and fair compared to the commissions, fees or other remuneration paid
to other brokers in connection with comparable transactions involving similar
securities being purchased or sold on an exchange during a comparable period of
time. The Fund will not deal with a Brokerage Affiliate in any portfolio
transaction in which the Brokerage Affiliate would act as principal.
The Investment Advisory Agreement also provides that the Investment
Adviser's liability to the Fund and its shareholders is limited to situations
involving its own willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its duties
and obligations under the Investment Advisory Agreement.
The services of the Investment Adviser to the Fund are not deemed to be
exclusive, and the Investment Adviser or any affiliate thereof may provide
similar services to other investment companies and other clients or engage in
other activities.
The Investment Advisory Agreement obligates the Investment Adviser to
pay all expenses from the performance of its obligations under the Investment
Advisory Agreement, as well as the fees of all Directors of the Fund who are
employees of the Investment Adviser or any of its affiliates. The Fund pays all
other expenses incurred in the operation of the Fund including, but not limited
to, direct charges relating to the purchase and sale of portfolio securities,
interest charges, fees and expenses of attorneys and auditors, taxes and
governmental fees, cost of stock certificates and any other expenses (including
clerical expenses) of issuance, sale or repurchase of shares of the Fund,
expenses in connection with the Fund's Distribution Reinvestment and Cash
Purchase Plan, membership fees in trade associations, expenses of registering
and qualifying shares of the Fund's common stock for sale under Federal and
state securities laws, expenses of obtaining and maintaining any stock exchange
listings of the Fund's common stock, expenses of printing and distributing
shareholder reports, prospectuses, notices and proxy materials, expenses of
corporate data processing and related services (including salaries of
shareholder relations personnel), shareholder record keeping and shareholder
account services, expenses of auditors and escrow agents, expenses of printing
and filing reports and other documents filed with governmental agencies,
expenses of annual and special shareholders' meetings, fees and disbursements of
the Fund's administrator, transfer agents, custodians and subcustodians (if
any), expenses of disbursing dividends and distributions, fees, expenses and
out-of-pocket costs of Directors of the Fund who are not interested persons of
the Fund or the Investment Adviser, insurance premiums and litigation,
indemnification and other expenses not expressly provided for in the Investment
Advisory Agreement or the administration agreement with the Administrator.
5
<PAGE> 9
The Investment Advisory Agreement will remain in effect for a period of
two years from the date of its commencement and will continue in effect from
year to year if approved annually (i) by the Board of Directors of the Fund or
by the holders of a majority of the Fund's outstanding voting securities, and
(ii) by a majority of the Directors who are not parties to the Investment
Advisory Agreement or interested persons of any such party. The Investment
Advisory Agreement terminates on its assignment by either party, and may be
terminated without penalty on not more than 60 days' prior written notice at the
option of either party thereto, or by the affirmative vote of the holders of a
majority of the Fund's outstanding voting securities.
The Investment Advisory Agreement provides that the Fund may use
"Zweig" as part of its name for so long as the Investment Adviser serves as
investment adviser to the Fund. The Fund has agreed that, in the event the
Investment Advisory Agreement is terminated, the Fund will promptly take such
actions as may be necessary to change its corporate name to one not containing
the word "Zweig," and the Fund will thereafter not transact business in a
corporate name using the word "Zweig" in any form or combination whatsoever. The
Fund has also acknowledged that the Investment Adviser and/or certain affiliates
of the Investment Adviser may at any time permit other investment companies to
use the word "Zweig."
THE INVESTMENT ADVISER
The Investment Adviser is a Delaware corporation which is controlled by
Dr. Martin E. Zweig. Its address is 900 Third Avenue, New York, New York 10022.
The names and principal occupations of the executive officers and directors of
the Investment Adviser are set forth below. The address of each, as it relates
to his duties with Investment Adviser or the Fund, is the same as that of the
Investment Adviser.
<TABLE>
<CAPTION>
Position with the
Name Investment Adviser Principal Occupation
- ---- ------------------ --------------------
<S> <C> <C>
Martin E. Zweig President, Director and Chairman, President and Director, The Zweig Fund, Inc.
Shareholder and The Zweig Total Return Fund, Inc.; Chairman,
Zweig/Glaser Advisers and Euclid Advisors LLC; Managing
Director, Zweig-DiMenna Associates LLC; President and
Director, Gotham Advisors, Inc. and Zweig Advisors
Inc.; Shareholder, Zweig Securities Corp. and Watermark
Securities, Inc.; President and Director, Zweig-DiMenna
International Managers, Inc.; and President, Zweig
Series Trust, Zweig Associates, Inc., and Zweig
Consulting LLC.
Jeffrey Lazar Vice President, Treasurer, Director, Vice President and Treasurer, The Zweig Fund,
Secretary Inc. and The Zweig Total Return Fund, Inc.; Vice
and Shareholder President, Treasurer and Secretary Zweig Advisors Inc.;
and Vice President, Zweig Series Trust.
</TABLE>
Since, following the Acquisition, Dr. Zweig will provide services to
the Fund pursuant to the Servicing Agreement, Dr. Zweig will not continue in his
positions with the Investment Adviser, Zweig Advisors Inc. and the Administrator
following the consummation of the Acquisition. In addition, upon consummation of
the Acquisition, it is contemplated that Philip R. McLoughlin, the Chairman of
the Board and Chief Executive Officer of Phoenix, will become the Chairman of
the Board, Chief Executive Officer and President of the Investment Adviser and
Zweig Advisors Inc. and Chairman of the Board and
6
<PAGE> 10
Chief Executive Officer of the Administrator (see "Information Concerning
Phoenix" below), and Jeffrey Lazar, who is currently Vice President of the
Investment Adviser, will become Executive Vice President of the Investment
Adviser and Zweig Advisors Inc. and Carlton B. Neel, who is currently First Vice
President of the Administrator and a Portfolio Manager for the Investment
Adviser and Zweig Advisors Inc., will become a Vice President of the Investment
Adviser and Zweig Advisors Inc.
Eugene J. Glaser and Annemarie Gilly, who are directors of the Fund,
and Stuart B. Panish, who is Vice President and Secretary of the Fund, are
shareholders of the Investment Adviser, each owning less than 10% of the
Investment Adviser's outstanding common stock. Joseph A. DiMenna owns 18.11% of
the Investment Adviser's outstanding common stock. Mr. DiMenna's address is 900
Third Avenue, New York, New York 10022.
SERVICING AGREEMENT
The Investment Adviser, the Administrator and Zweig Advisors Inc.
(collectively, the "Advisers") have historically had access to the advice and
consulting services of Dr. Zweig and his research associates ("Associates"). In
order to continue that relationship after the Acquisition, when Dr. Zweig and
his Associates will no longer be employed by the Advisers, the Advisers will
enter into the Servicing Agreement with the Sub-Adviser. Dr. Zweig is the
President of the Sub-Adviser and his Associates are employed by the Sub-Adviser.
Dr. Zweig is President or Chairman of investment advisory firms that
presently manage over $8 billion of assets, of which approximately half are in
the publicly traded closed-end investment companies and open-end mutual funds,
including the Fund.
Pursuant to the Servicing Agreement, Dr. Zweig and his Associates will
continue to devote their skill and time consistent with the practices of Dr.
Zweig and his Associates prior to the closing of the Acquisition, to the
business and affairs of the Advisers and to the promotion of their interests, in
particular, performing asset allocation research and analysis and providing
advice thereon at a level and in a manner consistent with the past practices of
Dr. Zweig and his Associates and the Advisers (the "Services"). The Sub-Adviser
will agree not to provide Services to any "competing business." The Advisers and
the Sub-Adviser will also agree to mutual confidentiality provisions pursuant to
the Servicing Agreement. Dr. Zweig intends to continue to serve as the President
of the Fund and other affiliated funds.
The Servicing Agreement will be dated and effective as of the
consummation of the Acquisition and shall continue until the third anniversary
thereof. The Advisers may terminate the Servicing Agreement immediately for
cause, in the event of Dr. Zweig's death or disability, or upon 30 days' notice.
With respect to the Fund, unless sooner terminated, the Servicing Agreement will
continue in effect for two years, and thereafter until terminated, provided that
the continuation of the Servicing Agreement and the terms thereof are
specifically approved annually in accordance with the requirements of the 1940
Act by a majority of the Fund's outstanding voting securities or a majority of
its Board of Directors, and, in any event, by a majority of the Directors who
are not "interested persons", as defined in the 1940 Act, cast in person at a
meeting called for the purpose of voting on such approval. In addition, with
respect to the Fund, the Servicing Agreement may be terminated at any time,
without payment of any penalty, by the Board of Directors of the Fund, or by a
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the Fund, upon not less than sixty (60) day's written notice. With
respect to the Fund, the Servicing Agreement shall automatically terminate upon
its assignment or upon the termination of the Investment Advisory Agreement. The
continuation of the Investment Advisory Agreement, however, will not be
dependent on the continuation of the Servicing Agreement.
7
<PAGE> 11
The Advisers will pay the Sub-Adviser consulting fees equal to the
share of the costs and expenses of the Sub-Adviser that are allocable to the
Advisers in performing the Services, determined in good faith on a basis
consistent with prior practice taking into consideration the percentage of Dr.
Zweig's and each Associate's time devoted to performing the Services. The
Sub-Adviser will also receive research benefits along with the Advisers from the
brokerage transactions for their clients' accounts by the Advisers pursuant to
the procedures adopted under Section 28(e) of the Securities Exchange Act of
1934. The Fund will not incur any new or additional costs due to the Servicing
Agreement.
THE SUB-ADVISER
The Sub-Adviser is a New York limited liability company which is
controlled by Dr. Zweig. [This company has not yet been formed.] The address of
the Sub-Adviser is 900 Third Avenue, New York, New York 10022. The names and
principal occupations of the executive officers and directors of the Sub-Adviser
are set forth below. The address of each, as it relates to his duties with the
Sub-Adviser or the Fund, is the same as that of the Sub-Adviser.
<TABLE>
<CAPTION>
Position with
Name the Sub-Adviser Principal Occupation
- ---- --------------- --------------------
<S> <C> <C>
Martin E. Zweig President See under "The Investment Adviser."
Anthony Berkman Senior Vice President Research Analyst, Zweig Advisors Inc., Zweig Total
Return Advisors, Inc., Zweig/Glaser Advisers, Zweig
Associates, Inc. and Zweig-DiMenna International
Managers Inc.
Andrew Salamy Senior Vice President Research Analyst, Zweig Advisors Inc., Zweig Total
Return Advisors, Inc., Zweig/Glaser Advisers, Zweig
Associates, Inc. and Zweig-DiMenna International
Managers Inc.
Michael Schaus Senior Vice President Research Analyst, Zweig Advisors Inc., Zweig Total
Return Advisors, Inc., Zweig/Glaser Advisers, Zweig
Associates, Inc., Zweig-DiMenna International Managers
Inc. and Gotham Advisors, Inc.
</TABLE>
Since, following the Acquisition, Messrs. Berkman, Salamy and Schaus
will provide services to the Fund pursuant to the Servicing Agreement, they will
not continue in their positions with the Investment Adviser, Zweig Advisors Inc.
and the Administrator following the consummation of the Acquisition.
ADMINISTRATIVE SERVICES
The Administrator currently provides administrative services to the
Fund. For the fiscal year ended December 31, 1998, the Fund accrued fees of $
_____ to the Administrator for such services. The Administrator is a partnership
of Glaser Corp., which is controlled by Eugene J. Glaser, and Zweig Management
Corp., which is controlled by Dr. Zweig. The ownership interests of the
Administrator will be sold to Phoenix as part of the Acquisition. By its terms,
the Fund's agreement with the Administrator will terminate upon the Acquisition.
The Fund intends to enter into a new agreement with the Administrator on
substantially the same terms as the current agreement to continue to retain the
Administrator to provide administrative services to the Fund subsequent to the
Acquisition. In the future,
8
<PAGE> 12
certain of the Fund's administrative functions may be performed by Phoenix. See
"Board of Directors' Consideration" below.
INFORMATION CONCERNING PHOENIX
The following information concerning Phoenix and the Acquisition has
been provided to the Fund by Phoenix.
Phoenix is a large, diversified financial services organization and is
a 60% owned subsidiary of Phoenix Home Life Mutual Insurance Company. Through
its operating subsidiaries and affiliates, Phoenix provides a variety of
investment products and services to investors throughout the United States and
abroad. Phoenix provides management, administrative and distribution services
for 54 mutual funds, as well as individual and institutional clients. As of
December 31, 1998, Phoenix had over $51 billion in assets under management. The
Phoenix mutual funds are distributed through a network of broker-dealers,
financial planners and investment advisers. Phoenix is headquartered in
Hartford, Connecticut, and its common stock is listed on the New York Stock
Exchange (symbol: PXP).
The names, addresses and principal occupations of the principal
executive officers of Phoenix, which is located at 56 Prospect Street, Hartford,
CT 06115, are as follows. The address of each individual, as it relates to his
duties at Phoenix, is the same as that of Phoenix.
<TABLE>
<CAPTION>
Name and Address Principal Occupation
- ---------------- --------------------
<S> <C>
Philip R. McLoughlin Chairman of the Board and Chief Executive Officer of Phoenix since May 1997.
Before that, Mr. McLoughlin was Vice Chairman of the Board and Chief
Executive Officer of Phoenix. He has also been a Director of Phoenix Home
Life since February 1994 and has been employed by Phoenix Home Life as
Executive Vice-President Investment since December 1988. In addition, Mr.
McLoughlin serves as President of Phoenix Equity Planning Corporation
("PEPCO"), Chairman of Phoenix Investment Counsel, Inc. and Chairman and
Chief Executive Officer of National Securities & Research Corporation. He
also is a member of the Board of Directors of Duff & Phelps Utilities
Tax-Free Income Inc. and Duff & Phelps Utility and Corporate Bond Trust,
Inc. Mr. McLoughlin also serves as President and as a Director or Trustee of
the Phoenix Funds, Phoenix Duff & Phelps Institutional Mutual Funds and
Phoenix-Aberdeen Series Fund. He is also a Director of PM Holdings, Phoenix
Charter Oak Trust Company, The World Trust, a Luxembourg closed-end fund, The
Emerging World Trust Fund, a Luxembourg closed-end fund, and of PXRE
Corporation, a publicly traded corporation, and of its wholly owned
subsidiary, PXRE Reinsurance Company.
Calvin J. Pedersen A member of the Board of Directors of Phoenix since 1992 and President of
Phoenix since July 1993. From January 1992 to July 1993, Mr. Pedersen served
as an Executive Vice President of Phoenix. Mr. Pedersen was also an
Executive Vice President of Duff & Phelps, Inc., the former parent of
Phoenix's operating subsidiaries, from 1988 until its dissolution in 1992.
Mr. Pedersen is also President and Chief Executive Officer of Duff & Phelps
Utilities Income Inc., Duff & Phelps Utilities Tax-Free Income Inc., and Duff
& Phelps Utility and Corporate Bond Trust Inc. and serves as a Director or
Trustee of the Phoenix Funds, Phoenix Duff & Phelps Institutional Mutual
Funds and Phoenix-Aberdeen Series Fund.
</TABLE>
9
<PAGE> 13
<TABLE>
<S> <C>
Michael E. Haylon Executive Vice President of Phoenix since November 1, 1995. From February
1993 to November 1, 1995, Mr. Haylon was Senior Vice President Securities
Investments of Phoenix Home Life. Mr. Haylon is also President of Phoenix
Investment Counsel, Inc., Executive Vice President of National Securities &
Research Corporation and Executive Vice President of the Phoenix Funds,
Phoenix Duff & Phelps Institutional Mutual Funds and Phoenix-Aberdeen Series
Fund. Mr. Haylon also serves as a member of the Board of Directors of
Phoenix Investment Counsel, Inc., PEPCO and National Securities & Research
Corporation.
John F. Sharry Executive Vice President of Phoenix since January 1998. From 1995 through
1997 Mr. Sharry was Managing Director, Retail, Phoenix Equity Planning
Corporation. Mr. Sharry is also Executive Vice President of the Phoenix
Funds and Phoenix-Aberdeen Series Fund. Previously Mr. Sharry was Managing
Director and National Sales Manager of Putnam Funds from December 1992
through 1994.
Thomas N. Steenburg Senior Vice President of Phoenix since January 1999. From 1995 through 1998
Mr. Steenburg was Vice President and Counsel of Phoenix, and from 1991
through 1994 he was Counsel to Phoenix Home Life Mutual Insurance Company.
Mr. Steenburg also serves as General Counsel to Seneca Capital Management LLC
and to Roger Engemann & Associates, Inc., and as Executive Vice President of
Duff & Phelps Investment Management Co. Mr. Steenburg serves as Secretary or
Assistant Secretary to each of the Phoenix Funds, Phoenix-Aberdeen Series
Fund, Phoenix Duff & Phelps Institutional Mutual Funds, Phoenix-Seneca Funds,
Phoenix-Engemann Funds, Duff & Phelps Utilities Tax-Free Income Inc. and Duff
& Phelps Utility and Corporate Bond Trust Inc.
William R. Moyer Senior Vice President and Chief Financial Officer of Phoenix since 1995. Mr.
Moyer is also the Chief Financial Officer and a Senior Vice President of
PEPCO, National Securities & Research Corporation and Phoenix Investment
Counsel, Inc. In addition, Mr. Moyer also serves as Treasurer of National
Securities & Research Corporation and Phoenix Investment Counsel, Inc. Mr.
Moyer also is a Vice President of the Phoenix-Aberdeen Series Fund and the
Phoenix Duff & Phelps Institutional Mutual Funds.
</TABLE>
INFORMATION CONCERNING THE ACQUISITION
The Investment Adviser, the Administrator, Euclid Advisors LLC, Zweig
Advisors Inc. and Zweig Securities Corp (collectively, the "Zweig Group"), and
the equityholders of the Zweig Group entered into an Acquisition Agreement with
Phoenix dated as of December 15, 1998. The Acquisition Agreement provides that
the purchase price for the Zweig Group is to be $135 million, which is subject
to upward and downward price adjustments that could cause the ultimate purchase
price to be as much as $164 million.
The obligation of Phoenix to close the Acquisition is subject to
various conditions and requirements, including filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. Some conditions include
obtaining approvals from the Board and shareholders of the Fund. As a condition
to Phoenix's obligation to close the Acquisition, the Board has approved a new
Investment Advisory
10
<PAGE> 14
Agreement along with a new Servicing Agreement, and the shareholders shall have
approved the new Investment Advisory Agreement and new Servicing Agreement.
In addition, pursuant to the Acquisition Agreement, certain employees
of the Investment Adviser and the Administrator, including Eugene J. Glaser,
Jeffrey Lazar and Carlton B. Neel, have entered into 3-year employment
agreements, effective upon the closing of the Acquisition, providing for the
continuation of their employment. The agreements each provide that the
employee's responsibilities shall be commensurate with his responsibilities
prior to the closing. Each agreement also provides for both salary and annual
incentive compensation, certain benefits, confidentiality provisions, covenants
not to compete and severance payments. Upon the consummation of the Acquisition,
Dr. Zweig and Mr. Glaser will also execute 5 year non-competition agreements.
[Documentation to be finalized.]
As a condition to the completion of the Acquisition, the Servicing
Agreement which was discussed above shall have been entered into by the
Advisers, including the Investment Adviser, and Zweig Consulting LLC (or
permitted successor organization) and the composition of the Board of the Fund
is to be reasonably acceptable to Phoenix. See "Investment Company Act
Considerations" below.
USE OF THE ZWEIG NAME
Dr. Zweig has a service mark that protects the use of the name "Zweig"
in connection with offering or providing investment services. Pursuant to the
Acquisition Agreement, Dr. Zweig will enter into a License Agreement with
Phoenix to permit Phoenix to use the service mark of Dr. Zweig in connection
with its investment advisory, consulting, mutual fund and wrap programs in the
United States and worldwide.
Phoenix has agreed with the Board that, for so long as the Investment
Adviser is the investment adviser to the Fund, the Fund may continue to use the
Zweig mark in the name of the Fund.
INVESTMENT COMPANY ACT CONSIDERATIONS
Pursuant to Section 15 of the 1940 Act, the current investment advisory
agreement between the Fund and the Investment Adviser terminates automatically
upon its assignment, which is deemed to include any change of control of the
Investment Adviser. Section 15(a) of the 1940 Act prohibits any person from
serving as an investment adviser to a registered investment company except
pursuant to a written contract that has been approved by the shareholders.
Therefore, in order for the Investment Adviser and Sub-Adviser to be able to
provide investment advisory services to the Fund after the Acquisition, the
shareholders of the Fund must approve a new Investment Advisory Agreement and
Servicing Agreement.
In addition, the Acquisition Agreement specifically commits the
Investment Adviser and Phoenix to comply with the requirements of Section 15(f)
of the 1940 Act which provides, in pertinent part, that an investment adviser
may receive an amount or benefit in connection with a sale of the investment
adviser which results in an assignment of a fund's investment advisory contract
if (i) for a period of three years after the sale, at least 75% of the members
of the board of directors of such fund are independent -- i.e., not "interested
persons" (as defined in the 1940 Act) -- of the new or old investment adviser;
and (ii) for a two-year period there is no "unfair burden" imposed on the fund
as a result of the acquisition.
Section 16(b) of the 1940 Act provides that any vacancy on a board of
directors if filled by a person in satisfaction of Section 15(f)'s 75%
disinterested director requirement must be filled by a person who is not an
interested person and who has been selected and proposed by a majority of the
independent directors and who is elected by the shareholders. However, a vacancy
due to death, disqualification or bona fide resignation can be filled by the
board of directors. In addition, Section 16(a) of the 1940 Act
11
<PAGE> 15
provides that all persons serving on the board of directors of a fund must have
been elected by the shareholders at an annual meeting or at a special meeting
called for that purpose, except that vacancies between meetings may be filled by
the board of directors as long as immediately following the filling of such
vacancy at least two-thirds of the board is comprised of directors who have been
elected by the shareholders.
The Fund currently has 10 Directors, all of whom but one, Eugene J.
Glaser, have been elected by the shareholders of the Fund. Following the
consummation of the Acquisition, Mr. Glaser, Ms. Gilly, Mr. Lazar and Mr. Smith,
all interested persons, will not continue in their positions as directors of the
Fund, and the Board will then have 6 remaining directors only one of whom, Dr.
Zweig, will be an interested person. Thus, the Board will meet the requirements
of Section 16(a) that at least two-thirds of its Directors have been elected by
the shareholders and the requirement of Section 15(f) that at least 75% of the
Directors not be interested persons.
The term "unfair burden" is defined in Section 15(f) to include any
arrangement during the two-year period after an acquisition whereby the
investment adviser, or any interested person of any such adviser, receives or is
entitled to receive any compensation, directly or indirectly, from the
investment company or its shareholders (other than fees for bona fide investment
advisory or other services) or from any person in connection with the purchase
or sale of securities or other property to, from or on behalf of the investment
company (other than bona fide ordinary compensation as principal underwriter for
such investment company). In the Acquisition Agreement, Phoenix has agreed that
it would impose no unfair burden on the Fund as a result of the Acquisition.
Phoenix has agreed to indemnify and hold the Zweig Group and the equityholders
of the Zweig Group harmless from and against and in respect of any and all
losses or damages arising in connection with the imposition of any unfair burden
on the Fund that is caused by acts or conduct within the control of Phoenix or
its affiliates.
The new Investment Advisory Agreement and Servicing Agreement, if
approved by the Fund's shareholders, will commence at the closing of the
Acquisition. The new Investment Advisory Agreement, and, with respect to the
Fund, the Servicing Agreement, will remain in effect for an initial term of two
years and will continue in effect thereafter for successive periods if and so
long as such continuance is specifically approved annually by (a) the Board of
Directors or (b) a majority vote of the Fund's shareholders, provided that, in
either event, the continuance also is approved by a majority of the Directors
who are not "interested persons" by vote cast in person at a meeting called for
the purposes of voting on such approval.
BOARD OF DIRECTORS' CONSIDERATION
The Board met on December 17, 1998 to consider the Acquisition,
including the proposed new Investment Advisory Agreement and Servicing
Agreement, and its anticipated effects upon the Investment Adviser and the
investment management and other services provided to the Fund by the Investment
Adviser and its affiliates. At the meeting, the Board, including a majority of
the Directors who are not parties to the Investment Advisory Agreement or
interested persons of any such party, voted to approve the new Investment
Advisory Agreement and the new Servicing Agreement and to recommend the
agreements to shareholders for their approval. If the Acquisition is not
completed, then the current Investment Advisory Agreement will continue in
effect and the Servicing Agreement will not become effective.
The independent Directors retained their own counsel to assist them in
evaluating this proposal, including the matters discussed in this proxy
statement. The Board of Directors believes that approval of the Proposal is in
the best interests of the Fund.
12
<PAGE> 16
In making this recommendation, the Board has exercised its independent
judgment based on a careful review of the proposed changes and potential
benefits. The Directors' considerations are described below. The Directors'
approval and recommendation that shareholders approve the Proposal are based on
the following factors, among others:
- - Portfolio Management Continuity -- No change in the portfolio
management of the Fund is expected to result from the Acquisition.
Moreover, the Fund will continue to receive the services of Dr. Zweig
and his Associates pursuant to the new Servicing Agreement. In this
connection, the Board took into account that it recently (on September
10, 1998) approved the continuation of the Investment Advisory
Agreement with the Investment Adviser and that in connection with that
approval it had reviewed and considered factors typically considered by
directors in connection with such approvals.
- - Administrative Services -- The administrative services and management
functions for the Fund initially will continue to be performed by the
same personnel. Phoenix has represented that at least the present level
and quality of services for the Fund and the shareholders will be
maintained after the Acquisition.
- - Fees -- The fee rate payable by the Fund under the new Investment
Advisory Agreement will be the same rate as payable by the Fund under
the current Investment Advisory Agreement. The fees under the new
Servicing Agreement will be paid by the Advisers. The Fund will not
incur any new or additional costs due to the Servicing Agreement.
- - Benefits from Phoenix Relationship -- Although the Investment Adviser
will act independently of Phoenix in providing investment management
services to the Fund, the experience of Phoenix in managing investment
companies may provide an additional resource for information for the
Investment Adviser in performing its investment management functions.
Moreover, the Administrator expects, over time, to shift certain
administrative functions to Phoenix as part of its larger mutual fund
administrative activities. Phoenix assured the Directors that the Fund
will share in the benefits of such efficiencies.
During its review and deliberations, the Board of Directors evaluated
the potential benefits, detriments and costs to the Fund and its shareholders of
the proposed Acquisition. The Board received information regarding the new
Investment Advisory Agreement and new Servicing Agreement. The Board also
received information from Phoenix regarding its management, history,
qualifications and other relevant information, including portfolio transaction
practices. The Chief Executive Officer of Phoenix made a presentation and was
available for questions at the Board meeting.
The Board also considered the qualifications and capabilities of the
Investment Adviser to serve as the investment adviser for the Fund. The
Investment Adviser's new parent company, Phoenix, through its predecessors, has
been in operation since 1932 and has been in the investment management business
since 1979. Phoenix has extensive experience managing investment companies. As
of December 31, 1998, Phoenix had over $51 billion in assets under management,
including $____ billion in institutional accounts, $____ billion in closed-end
investment companies, $___ billion in open-end investment companies, and $____
billion in the Phoenix Home Life general account.
In evaluating the Acquisition, including the new Investment Advisory
Agreement with the Investment Adviser and the Servicing Agreement with the
Sub-Adviser, the Board determined that the Fund's shareholders would likely
benefit from the expected retention and the continued availability of the
management expertise of Dr. Zweig and his Associates through the Servicing
Agreement with the Sub-Adviser. In addition, the Board deemed it beneficial that
certain senior executives of the Investment Adviser and the Administrator have
agreed to sign employment contracts (see "Information Concerning the
Acquisition") and that Dr. Zweig intends to continue to serve as President of
the Fund.
13
<PAGE> 17
In addition, the Board had discussions with the Chief Executive Officer
of Phoenix regarding the continuity of management functions and the level and
quality of services affecting the Fund, and considered the representations by
Phoenix of its intention to maintain the continuity of management functions and
the current level and quality of services obtained by the Fund after the
Acquisition. In addition, the Board deemed it beneficial to shareholders for the
Fund to be affiliated with the Phoenix organization for several reasons,
including the greater financial strength of the sponsoring entity and Phoenix's
larger technological infrastructure.
The Board determined that the proposed Investment Advisory Agreement
and Servicing Agreement were beneficial and in the best interests of the Fund in
that the contractual rates for investment advisory fees would be the same as the
current fees.
The Investment Adviser and Phoenix assured the Board that they intend
to comply with Section 15(f) of the 1940 Act. As discussed above, Section 15(f)
provides a safe harbor for an investment manager to an investment company or any
of its affiliated persons to receive payments in connection with a change in
control of the investment adviser so long as certain conditions are met. These
conditions include that no "unfair burden" be imposed on the Fund for a two-year
period. The Investment Adviser and Phoenix informed the Board that they are not
aware of any express or implied term, condition, arrangement or understanding
that would impose an unfair burden on the Fund as a result of the Acquisition.
Phoenix agreed that it and its affiliates will take no action that would have
the effect of imposing an "unfair burden" on the Fund as a result of the
Acquisition, and will indemnify and hold the Zweig Group and the equityholders
of the Zweig Group harmless from and against and in respect of any losses or
damages arising in connection with the imposition of any unfair burden on the
Fund that is caused by acts or conduct within the control of Phoenix or its
affiliates.
Based upon its evaluation of the relevant information presented to
them, and in light of their fiduciary duties under federal and state law, the
Board, including all the disinterested Directors of the Fund, determined that
the transactions contemplated by the Acquisition, including the new Investment
Advisory Agreement and the new Servicing Agreement, are advisable and in the
best interests of the Fund and the Fund's shareholders, and recommended the
approval of the Proposal by the shareholders.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE NEW INVESTMENT
ADVISORY AGREEMENT AND THE NEW SERVICING AGREEMENT.
ADDITIONAL INFORMATION
OTHER MATTERS
The Board of Directors knows of no matters to be presented at the
Meeting other than those specified in the accompanying Notice of Special
Meeting. However, if any other matter is properly presented before the Meeting,
it is the intention of the persons named as proxies to vote in accordance with
their best judgment.
EXPENSES
Phoenix and the equityholders of the Zweig Group will bear the expense
of the Special Meeting, including preparation, printing and mailing of the
enclosed form of proxy and accompanying Notice of Special Meeting and this Proxy
Statement. Phoenix and the equityholders of the Zweig Group, upon request, will
reimburse banks, brokers and others for their reasonable expenses in forwarding
proxy solicitation material to the beneficial owners of the Fund's common stock.
In order to obtain the necessary quorum at the Meeting, supplementary
solicitations may be made by mail, telephone or personal interviews by officers
or employees of Phoenix, the Fund, the Investment Adviser and certain
14
<PAGE> 18
financial services firms and their representatives, who will receive no extra
compensation for their services. In addition, Phoenix and the equityholders of
the Zweig Group may retain a firm to solicit proxies on behalf of the Board of
Directors, the fee for which will be borne by Phoenix and the equityholders of
the Zweig Group.
VOTE REQUIRED
The approval of the new Investment Advisory Agreement and Servicing
Agreement requires the affirmative vote of a "majority of the outstanding voting
securities" of the Fund. The term "majority of the outstanding voting
securities" of the Fund as defined in the 1940 Act means the affirmative vote of
the lesser of (i) 67% of the voting securities of the Fund present at the
Meeting if more than 50% of the outstanding shares of the Fund are present in
person or by proxy, or (ii) more than 50% of the outstanding shares of the Fund.
The following principles of Maryland law apply to the voting of shares of common
stock at the Meeting. The presence in person or by proxy of shareholders
entitled to vote a majority of the outstanding shares will constitute a quorum.
Shares represented by proxy or in person at the Meeting, including shares
represented by proxies that reflect abstentions, will be counted as present in
the determination of a quorum. Abstentions will be considered a vote "against"
the Proposal. "Broker non-votes" (i.e., where a broker or nominee submits a
proxy specifically indicating the lack of discretionary authority to vote on a
matter) will be treated in the same manner as abstentions. Broker non-votes are
not likely to be relevant to this meeting because the Proposal to be voted upon
by the shareholders involves a matter that is considered routine and within the
discretion of brokers to vote if no customer instructions are received. Votes
will be tabulated by State Street Bank & Trust Company, the Fund's transfer
agent. Proxies given by telephone or electronically transmitted instruments may
be counted if obtained pursuant to procedures designed to verify that such
instructions have been authorized.
LITIGATION
An action was commenced in December 1998, in the Second Judicial
District Court of Bernalillo County, New Mexico, entitled Solv-Ex Corporation,
et al., Plaintiffs v. Deutsche Bank AG, et al., Defendants, in which Dr. Zweig
and Zweig Advisors Inc. are named as defendants. The complaint seeks to recover
compensatory and punitive damages for breach of contract, fraud, aiding and
abetting tortious conduct, interference with prospective economic advantage,
breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust
enrichment, conspiracy and violation of the New Mexico Securities Act of 1986,
and for imposition of a constructive trust. Management believes that Dr. Zweig
and Zweig Advisors Inc. were improperly named as defendants.
PROPOSALS FOR 1999 ANNUAL MEETING
Any proposals of shareholders that were intended to be presented at the
Fund's 1999 Annual Meeting of Shareholders must have been received at the Fund's
principal executive offices no later than December 2, 1998, and must have
complied with all other legal requirements in order to be included in the Fund's
proxy statement and form of proxy for that meeting.
New York, New York
January __, 1999
By Order of the Board of Directors
MARTIN E. ZWEIG,
Chairman of the Board
15
<PAGE> 19
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE ZWEIG TOTAL RETURN FUND, INC.
AND
ZWEIG TOTAL RETURN ADVISORS, INC.
THIS AGREEMENT is made this day of , 1999 by and between THE ZWEIG
TOTAL RETURN FUND, INC., a Maryland corporation (the "Fund") and ZWEIG TOTAL
RETURN ADVISORS, INC., a Delaware corporation (the "Investment Adviser"):
W I T N E S S E T H:
WHEREAS, the Fund is registered as a closed-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "Act");
WHEREAS, the Investment Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Investment Advisers
Act"); and
WHEREAS, the Fund and the Investment Adviser desire to enter into an
agreement under which the Investment Adviser will provide investment advisory
and other services to the Fund on the terms and conditions hereinafter set
forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Management. Subject to the supervision and control of the Board of
Directors of the Fund, the Investment Adviser shall manage all aspects of the
Fund's affairs and shall supervise all aspects of the Fund's operations,
including, but not limited to, the investment and reinvestment of the cash,
securities or other properties comprising the Fund's assets in accordance with
the investment objectives and policies set forth in the Fund's registration
statement, as such registration statement or objectives and policies may be
amended from time to time, and the Act. In rendering such services, the
Investment Adviser may employ, retain or otherwise avail itself of the services
or facilities of other persons or organizations for the purpose of providing it
or the Fund with any or all of the services that the Investment Adviser is
required to provide to the Fund hereunder. The Investment Adviser shall not be
liable to the Fund for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the management of
the Fund and the performance of its duties under this Agreement except by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
A-1
<PAGE> 20
duties or by reason of its reckless disregard of its duties and obligations
under this Agreement.
2. Investment Analysis and Implementation. In carrying out its
obligations under Paragraph 1 hereof, the Investment Adviser shall:
(a) supervise and manage all aspects of the Fund's operations except to
the extent that such operations are supervised and managed by an administrator
to the Fund;
(b) provide the Fund with such executive, administrative, data
processing, clerical, accounting and bookkeeping services and statistical and
research data as are deemed advisable by the Fund's Board of Directors except to
the extent that any of the foregoing services are to be provided by an
administrator to the Fund;
(c) supervise, but not pay for, the periodic updating of the Fund's
registration statement (and amendments thereto), proxy material, tax returns,
reports to the Fund's shareholders and reports to and filings with the
Securities and Exchange Commission ("SEC") and state Blue Sky authorities;
(d) formulate and implement continuing programs for the purchases and
sales of portfolio securities and regularly report thereon to the Fund's Board
of Directors;
(e) take, on behalf of the Fund, all actions which appear to the
Investment Adviser necessary or appropriate to carry into effect such purchase
and sale programs and supervisory functions as aforesaid, including the placing
of orders for the purchase and sale of portfolio securities; and
(f) furnish, on behalf of the Fund, the Fund's administrator and
custodian with information on a daily basis with respect to the Fund's portfolio
transactions and with such other information as such administrator may
reasonably request from time to time.
3. Expenses. The Investment Adviser shall pay all of its expenses
arising from the performance of its obligations under Paragraphs 1 and 2 (except
as otherwise stated therein) and shall pay any salaries, fees and expenses of
the directors of the Fund who are employees of the Investment Adviser or its
affiliates. The Investment Adviser shall not be required to pay any other
expenses of the Fund, including, but not limited to, direct charges relating to
the purchase and sale of portfolio securities, interest charges, fees and
expenses of attorneys and auditors, taxes and governmental fees, cost of stock
certificates and any other expenses (including clerical expenses) of issuance,
sale or repurchase of shares of the Fund, expenses in connection with the Fund's
Distribution Reinvestment and Cash Purchase Plan, membership fees in trade
associations, expenses of registering and qualifying shares of the Fund for sale
under federal and state securities laws, expenses of obtaining and maintaining
any stock exchange listings of the Fund's shares, expenses of printing and
distributing shareholder reports, prospectuses, notices and proxy materials,
expenses of corporate data processing and related services, shareholder record
keeping and shareholder account services (including salaries of shareholder
relations personnel), expenses of auditors and escrow agents, expenses of
printing and filing reports and other documents filed with governmental
agencies, expenses of annual and special shareholders' meetings, fees and
disbursements of the Fund's administrator, transfer agents, custodians, and
subcustodians (if any), expenses of disbursing dividends and distributions,
fees, expenses and
A-2
<PAGE> 21
out-of-pocket costs of directors of the Fund who are not interested persons of
the Fund or the Investment Adviser, insurance premiums and litigation,
indemnification and other expenses not expressly provided for in this Agreement
or the Fund's administration agreement.
4. Compensation.
(a) As compensation for the services performed and the facilities and
personnel provided by the Investment Adviser pursuant to this Agreement, the
Fund will pay to the Investment Adviser on the first business day of each month
a fee for the previous month, at an annual rate of 0.70 of 1% of the average
daily value of the Fund's net assets during the previous month.
(b) If the Investment Adviser shall serve hereunder for less than an
entire month, the fee hereunder shall be prorated.
5. Purchase and Sale of Securities. The Investment Adviser shall
purchase securities from or through and sell securities to or through such
persons, brokers or dealers (including any affiliate of the Investment Adviser)
as the Investment Adviser shall deem appropriate in order to carry out the
policy with respect to allocation of portfolio transactions as set forth in the
Registration Statement and Prospectus of the Fund, as each may be amended from
time to time, or as the directors of the Fund may require from time to time.
When purchasing securities from or through, and selling securities to or
through, any such person, broker or dealer that may be an affiliate of the
Investment Adviser, the Investment Adviser shall comply with all applicable
provisions of the Act, including without limitation Section 17 thereof and the
rules and regulations thereunder, and Section 206 of the Investment Advisers Act
and the rules and regulations thereunder. In executing portfolio transactions
and selecting brokers or dealers, it is recognized that the primary
responsibility of the Investment Adviser is to seek the best combination of net
price and execution ("best execution") for the Fund, and, consistent with such
policy of seeking best execution, the Investment Adviser is authorized to place
orders with brokers and dealers who provide brokerage and research services (as
defined in Section 28(e) of the Securities Exchange Act of 1934, as amended). It
is further recognized that there may be occasions where the transaction cost
charged by a broker or dealer may be greater than that which another broker or
dealer may have charged if the Investment Adviser determines in good faith that
the amount of such transaction cost is reasonable in relation to the value of
the brokerage and research services provided by the executing broker or dealer.
It is understood that such brokerage and research services may benefit the
Investment Adviser and its affiliates in connection with their services to other
clients as well as the Fund. The Investment Adviser acknowledges that it will
comply with all applicable provisions of the Act, Investment Advisers Act and
the Securities Exchange Act of 1934, as amended, including without limitation
the provisions of Section 28(e) thereof, with respect to the allocation of
portfolio transactions.
Nothing herein shall prohibit the directors of the Fund from approving
the payment by the Fund of additional compensation to others for consulting
services, supplemental research and security and economic analysis.
6. Term of Agreement. The Fund represents and warrants that this
Agreement has been approved by (a) a majority of the Fund's directors, including
a majority of the directors who are not "interested persons" (as defined by the
Act) of the Fund or Investment Adviser and
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<PAGE> 22
(b) the vote of a majority of the outstanding voting securities of the Fund.
This Agreement shall continue in full force and effect for a period of two years
from the date of its commencement and will continue in effect from year to year
thereafter if such continuance is approved in the manner required by the Act.
This Agreement may be terminated at any time, without payment of penalty by
either party, on not more than 60 days' written notice to the other party by the
board of directors of the Fund or by vote of a majority of the outstanding
voting securities of the Fund (as defined by the Act) or by the Investment
Adviser. This Agreement will automatically terminate in the event of its
assignment (as defined by the Act).
7. Use of Word "Zweig" In Corporate Name. The Fund agrees and consents
that (a) it will only use the word "Zweig" as a component of its corporate name
and for no other purpose; (b) it will not purport to grant to any third party
the right to use the word "Zweig" for any purpose; (c) the Investment Adviser
and/or certain affiliates of the Investment Adviser may use or grant to other
investment companies the right to use the word "Zweig", or any combination or
abbreviation thereof, as all or a portion of a corporate or business name or for
any commercial purpose; and (d) upon the termination of any management agreement
into which the Investment Adviser and the Fund may enter, the Fund shall
promptly take such action, at its own expense, as may be necessary to change its
corporate name to one not containing the word "Zweig" and following such change,
shall not use the word "Zweig", or any combination thereof, as a part of its
corporate name or for any other commercial purpose, and shall use its best
efforts to cause its officers, directors and shareholders to take any and all
actions which may be necessary or desirable to effect the foregoing.
8. Services to Other Accounts. The Fund understands that the Investment
Adviser and its affiliates now act, will continue to act and may in the future
act as investment adviser to other managed accounts, and the Fund has no
objection to the Investment Adviser and its affiliates so acting, provided that
whenever the Fund and one or more other accounts advised by the Investment
Adviser or its affiliates are prepared to purchase, or desire to sell, the same
security, available investments or opportunities for sales will be allocated in
a manner the Investment Adviser believes to be equitable to each entity. The
Fund recognizes that in some cases this procedure may affect adversely the price
paid or received by the Fund or the size of the position purchased or sold by
the Fund, but understands that in other cases, coordination with transactions
for other accounts and the ability to participate in volume transactions could
benefit the Fund. In addition, the Fund understands that the persons employed by
the Investment Adviser to provide service to the Fund in connection with the
performance of the Investment Adviser's duties under this Agreement will not
devote their full time to that service. Moreover, nothing contained in this
Agreement will be deemed to limit or restrict the right of the Investment
Adviser or any affiliate of the Investment Adviser to engage in and devote time
and attention to other businesses or to render services of whatever kind or
nature, including serving as investment adviser to, or employee, officer,
director or trustee of, other investment companies.
9. Books and Records. The Investment Adviser shall maintain such books,
accounts, records and other documents as are required to be maintained under
Section 31 of the Act, except to the extent they are maintained by the Fund's
administrator. The Investment Adviser acknowledges that any such books,
accounts, records and other documents are the property of the Fund, and that
both the Fund and SEC shall have, at all times during business hours, free
access to such books, accounts, records and other documents.
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<PAGE> 23
10. Notices. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, to the Investment Adviser or to the Fund at
900 Third Avenue, New York, New York 10022, Attention: President with a copy to
Robert E. Smith, Esq., of Rosenman & Colin LLP, 575 Madison Avenue, New York,
New York 10022.
11. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon, either of the parties to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Fund and the Investment Adviser have caused
this Agreement to be executed by their duly authorized officers on the date
first above written.
ATTEST: THE ZWEIG TOTAL RETURN FUND, INC.
__________________________________ By:______________________________
President
ATTEST: ZWEIG TOTAL RETURN ADVISORS, INC.
__________________________________ By:______________________________
President
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<PAGE> 24
EXHIBIT B
SERVICING AGREEMENT
THIS SERVICING AGREEMENT is made and entered into as of this
________ day of __________, 1999 by and among Zweig/Glaser Advisers, a New York
general partnership, Zweig Total Return Advisors, Inc., a Delaware corporation,
and Zweig Advisors Inc., a Delaware corporation (collectively, the "Company"),
and Zweig Consulting LLC, a New York limited liability company ("Zweig").
WHEREAS Phoenix Investment Partners, Ltd., a Delaware
corporation ("Phoenix"), has entered into an Acquisition Agreement (the
"Acquisition Agreement") with Zweig/Glaser Advisers, a New York general
partnership, Euclid Advisors LLC, a New York limited liability company, Zweig
Advisors Inc., a Delaware corporation, Zweig Total Return Advisors, Inc., a
Delaware corporation, and Zweig Securities Corp., a New York corporation
(collectively, the "Sellers"), and the Equityholders named therein providing
for, among other things, the acquisition of all of the capital stock and
partnership interests of the Companies by Phoenix and/or one or more
wholly-owned subsidiaries of Phoenix (capitalized terms defined in the
Acquisition Agreement and not otherwise defined herein are used herein with such
defined meanings);
WHEREAS Zweig has heretofore performed services to the Company
and the Company is desirous of obtaining certain services and Martin E. Zweig,
as the President of Zweig (the "President"), has indicated to the Company that
he and his designated research associates (the "Associates") will provide the
Company and its Affiliates with such services as are specified in this
Agreement; and
WHEREAS the Company and Zweig have provided investment
advisory services to investment companies registered under the Investment
Company Act of 1940 (each a "Fund" and collectively "Funds") and desire to
continue to provide those investment advisory services;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto, intending to be legally bound, agree as follows:
1. Services
1.1 For this engagement, the President and the Associates will
devote their skill and approximately one-half of their full working time
consistent with the practices of Zweig prior to the Closing Date, to the
business and affairs of the Company and its Affiliates and to the promotion of
its and their interests, in particular, performing asset allocation research and
analysis and providing advice thereon at a level and in a manner consistent with
the practices of Zweig and the Company prior to the Closing Date (the
"Services"). The Services will be performed by the President and the Associates
in a manner and at a level consistent with the practices of Zweig and the
Company prior to the Closing Date. This Agreement shall be effective as of the
Closing Date for the term described in Section 2 below.
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<PAGE> 25
1.2 The Services will be provided to the Company and its
Affiliates during normal business hours at the offices of the Company in New
York City or at such other times and places mutually agreed upon and reasonably
convenient to both parties, taking into account the nature, exigencies and
reasons for the assistance required.
1.3 Notwithstanding Section 1.2, but subject to all of the
other terms and conditions of this Agreement, including in particular Sections 4
and 13, Zweig may continue to provide consulting services (whether in a
managerial, employee, consultant or other capacity) to the Affiliated Investment
Partnership Management Companies and the related investment partnerships and
Watermark Securities, Inc. and their successor or affiliate entities, as may
exist from time to time; provided, however, that in no event may Zweig provide
services to any "Competing Business" as defined in the
Noncompetition/Nonsolicitation Agreement dated the date hereof between the
President and Phoenix (the "Noncompetition/Nonsolicitation Agreement"). The
President shall also continue to be permitted to serve as the President of Zweig
Series Trust, The Zweig Fund, Inc. and The Zweig Total Return Fund, Inc.
2. Term
2.1 This Agreement shall be effective as of the Closing Date
and shall continue until the third anniversary thereof (the "Term") or such
earlier date as provided in Section 2.2; and with respect to any Fund, unless
sooner terminated, this Agreement shall continue in effect for two years, and
thereafter until terminated, provided that the continuation of this Agreement
and the terms thereof are specifically approved annually in accordance with the
requirements of the Investment Company Act of 1940 by a majority of such Fund's
outstanding voting securities or a majority of its board of directors or
trustees, and, in any event, by a majority of the directors or trustees who are
not "interested persons", as defined in the Investment Company Act of 1940, cast
in person at a meeting called for the purpose of voting on such approval.
2.2 The Company may terminate this Agreement immediately for
Cause and in the event of the President's death or Disability, and upon 30 days'
notice in the event of termination without Cause; and with respect to any Fund,
this Agreement may be terminated at any time, without payment of any penalty, by
the board of directors or trustees of that Fund, or by a vote of a majority (as
defined in the Investment Company Act of 1940) of the outstanding voting
securities of the Fund to which this Agreement is applicable, upon not less than
sixty (60) day's written notice. With respect to any Fund, this Agreement shall
automatically terminate in the event of its assignment, within the meaning of
the Investment Company Act of 1940, unless such automatic termination shall be
prevented by an exemptive order of the Securities and Exchange Commission, and
shall automatically terminate upon the termination of the Fund's investment
advisory agreement with the company that serves as its investment adviser.
2.3 Upon termination of this Agreement by the Company for
Cause or in the event of the President's death or Disability, the Company's
payment to Zweig of fees earned to the date of such termination shall be in full
satisfaction of all claims against the Company under this Agreement. If Zweig's
engagement with the Company hereunder is terminated by the Company other than
for Cause or the President's death or Disability, the Company shall continue to
pay to Zweig the Consulting Fees at a rate equal to the average of the monthly
Consulting Fees for the six months immediately preceding the month in which such
termination occurred (or
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<PAGE> 26
for the number of months in the Term that have elapsed as of the date of
termination, if fewer) for the remainder of the Term.
2.4 (i) For purposes of this Agreement, a termination of
Zweig's engagement hereunder is for "Cause" if the termination is evidenced by a
reasonable determination made by the Chief Executive Officer of Phoenix that:
(a) Zweig has willfully neglected its assigned duties with the Company, which
neglect has continued for a period of at least thirty (30) days after a written
notice of such neglect was delivered to the President specifying the claimed
neglect, (b) the President has been enjoined (other than temporary suspensions
of not more than ninety-one (91) days) by the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc. or any other
industry regulatory authority from working in the investment advisory or
securities industry, (c) the President has been convicted by a court of
competent jurisdiction of, or has pleaded guilty or nolo contendere to, any
felony or misdemeanor involving an investment or investment-related business,
(d) Zweig has engaged in a continuing violation of a material provision of this
Agreement, which violation has continued for a period of at least thirty (30)
days after a written notice of such violation was delivered to the President
specifying the claimed violation, or (e) the President has breached the
Noncompetition/Nonsolicitation Agreement.
(ii) For purposes of this Agreement, "Disability" means the
President's inability to perform the services he is required to perform under
this Agreement by reason of sickness, accident, injury, illness or any similar
event and which condition has existed for at least 180 consecutive days, or for
such shorter periods aggregating 180 days during any twelve month period.
3. Compensation
3.1 During the Term, for the Services to be provided by Zweig
under this Agreement, the Company agrees to pay Zweig consulting fees equal to
the share of the costs and expenses of Zweig that are allocable to the Company
in performing the Services, determined in good faith on a basis consistent with
Zweig's practice prior to the Closing Date, after taking into consideration the
percentage of the President's and each Associate's time devoted to performing
the Services (the "Consulting Fees"). Any material deviation from past practice
in the determination of the Consulting Fees shall require the consent of the
Company. In no event shall the Consulting Fees in any calendar year exceed [$ *]
without the consent of the Company which shall not be unreasonably withheld. The
Consulting Fees shall be payable monthly in arrears on the fifth day of each
month, following submission by Zweig to the Company of an itemized bill, setting
forth in reasonable detail the calculation of the Consulting Fees and the basis
for the allocation of costs and expenses to the Company. The Company and its
accountants and other advisors shall have access during normal business hours,
and without material business interruption, to the books and records and
personnel of Zweig relevant to the determination of the Consulting Fees.
____________________
* Such amount shall be in the range of approximately $1,500,000 to
$2,500,000 as determined by negotiation by the parties in good faith
prior to the Closing.
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<PAGE> 27
3.2 The Company shall provide or share with Zweig research
information, benefits and services, as defined in Section 28(e) of the
Securities Exchange Act of 1934, that results from brokerage transactions
implemented by the Company for the benefit of its clients.
3.3 The Company shall not have any liability with respect to
the compensation of employees retained by Zweig or by any affiliated entities.
3.4 Subject to the provisions of Section 2.3 hereof, upon
termination of this engagement for any reason, the Company shall have no further
obligations under this Agreement, but Zweig shall continue to be bound by
Section 4 and the Company shall continue to be bound by Section 5 hereof.
4. Confidentiality of Zweig
4.1 Zweig shall not at any time during the period of its
engagement with the Company hereunder or after the termination thereof directly
or indirectly divulge, furnish, use, publish or make accessible to any person or
entity any Confidential Information (as hereinafter defined) except in
connection with the performance of its duties hereunder. Any records of
Confidential Information prepared by Zweig or which come into its possession
during the term of this Agreement are and remain the property of the Company or
its Affiliates, as the case may be, and upon termination of the engagement all
such records and copies thereof shall be either left with or returned to such
entity. Confidential Information may be shared among the President and the
Associates or other employees of entities controlled by the President on a need
to know basis for purposes of providing the Services to the Company and its
Affiliates hereunder. Such Associates and any other employees shall be informed
of the confidential nature of such Confidential Information, the President shall
direct such Associates and any other employees to treat such information
confidentially and the President will be responsible for any breach of this
Section 4.1 by himself and by any persons to whom the President provides any
Confidential Information. Notwithstanding anything contained herein to the
contrary, the Company acknowledges that services overlapping or similar to the
Services provided by Zweig, the President and the Associates hereunder are also
performed on behalf of the Affiliates of Zweig and such Services are often not
exclusively performed by Zweig, the President and the Associates for the
Company. Consequently, the work product resulting from the Services is often
generated on behalf of both the Company and its Affiliates and the Affiliates of
Zweig and is shared among the employees of these entities (the "Shared Work
Product"). The Company further acknowledges that the Confidential Information
that generates such Shared Work Product may become known to the employees of
Zweig's Affiliates. The Company hereby agrees that the disclosure of
Confidential Information to the employees of the Zweig Affiliates who shall be
deemed employees covered by the fourth sentence of this Section 4.1, to the
extent such disclosure is necessary to generate any Shared Work Product, and the
use of Shared Work Product by the employees of the Zweig Affiliates, shall in no
event be deemed a breach of this Agreement.
4.2 The term "Confidential Information" includes, but is not
limited to, the following items, whether existing now or created in the future
and whether or not subject to trade secret or other statutory protection: (a)
all knowledge or information concerning the business, operations and assets of
the Company and its Affiliates which is not readily available to the public,
such as: internal operating procedures; investment strategies; sales data and
customer and
B-4
<PAGE> 28
client lists; financial plans, projections and reports; and investment company
programs, plans and products; (b) all property owned, licensed and/or developed
for the Company and/or its Affiliates or any of their respective clients and not
readily available to the public, such as computer systems, programs and software
devices, including information about the design, methodology and documentation
therefor; (c) information about or personal to the Company's and/or its
Affiliates' clients; (d) information, materials, products or other tangible or
intangible assets in the Company's and/or its Affiliates' possession or under
any of their control which is proprietary to, or confidential to or about, any
other person or entity, and (e) records and repositories of all of the
foregoing, in whatever form maintained.
The foregoing notwithstanding, the following shall not be
considered Confidential Information: (aa) general skills and experience gained
by providing service to the Company; (bb) information publicly available or
generally known within the Company's trade or industry; (cc) information
independently developed by the President or the Associates other than in the
course of the performance of their duties which are exclusive to the Company
hereunder; and (dd) information which becomes available to the President or the
Associates on a non-confidential basis from sources other than the Company or
its Affiliates, provided the President or the Associates do not know or have
reason to know that such sources are prohibited by contractual, legal or
fiduciary obligation from transmitting the information. Failure to mark any
material or information "confidential" shall not affect the confidential nature
thereof. All the terms of this Section 4 shall survive the termination of this
Agreement. The obligations hereunder shall be in addition to, and not in
limitation of, any other obligations of confidentiality the President or the
Associates may have to the Company.
4.3 At any time when so requested, and upon termination of the
engagement under this Agreement for any reason whatsoever and irrespective of
whether such termination is voluntary on Zweig's part or not, Zweig will deliver
to the Company all information in its possession (whether or not Confidential
Information) pertaining exclusively to the Company or any of its Affiliates and,
to the extent any such information is Shared Work Product, shall provide copies
to the Company with the understanding that Zweig and its Affiliates shall also
retain copies of such information.
5. Confidentiality of the Company
5.1 The Company and its Affiliates and their respective
employees shall not at any time during the period of Zweig's engagement with the
Company hereunder or after the termination thereof directly or indirectly
divulge, furnish, use, publish or make accessible to any person or entity any
Zweig Confidential Information (as hereinafter defined). It is expressly
understood that Shared Work Product may be shared among the Company and its
Affiliates and their respective employees. The Company and its Affiliates and
their respective employees shall be informed of the confidential nature of the
Zweig Confidential Information, the Company shall direct such employees to treat
such information confidentially and the Company will be responsible for any
breach of this Section 5.1 by its employees.
5.2 The term "Zweig Confidential Information" includes, but is
not limited to, the following items, whether existing now or created in the
future and whether or not subject to trade secret or other statutory protection:
(a) all knowledge or information concerning the business, operations and assets
of Zweig and its Affiliates which is not readily available to the
B-5
<PAGE> 29
public, such as: internal operating procedures; investment strategies; sales
data and customer and client lists; financial plans, projections and reports;
and investment company programs, plans and products; (b) all property owned,
licensed and/or developed for Zweig and/or its Affiliates or any of their
respective clients and not readily available to the public, such as computer
systems, programs and software devices, including information about the design,
methodology and documentation therefor; (c) information about or personal to
Zweig's and/or its Affiliates' clients; (d) information, materials, products or
other tangible or intangible assets in Zweig's and/or its Affiliates' possession
or under any of their control which is proprietary to, or confidential to or
about, any other person or entity; and (e) records and repositories of all of
the foregoing, in whatever form maintained.
The foregoing notwithstanding, the following shall not be
considered Zweig Confidential Information: (aa) general skills and experience
gained by providing service to the Company and its Affiliates; (bb) information
publicly available or generally known within Zweig's trade or industry; (cc)
information independently developed by the Company and its Affiliates and their
respective employees; and (dd) information which becomes available to the
Company and its Affiliates and their respective employees on a non-confidential
basis from sources other than Zweig, provided the Company and its Affiliates and
their respective employees do not know or have reason to know that such sources
are prohibited by contractual, legal or fiduciary obligation from transmitting
the information. All the terms of this Section 5 shall survive the termination
of this Agreement.
6. Ownership of Documents
All memoranda, papers, letters, notes, notebooks and all
copies thereof relating exclusively to the business or affairs of the Company
that are generated by Zweig or that come into its possession, in each case in
connection with its performance of Services to the Company under this Agreement,
shall be held by Zweig as the Company property and shall be delivered by Zweig
to the Company as the Company may request. To the extent any such memoranda,
papers, letters, notes and notebooks are the product of Zweig Confidential
Information or are Shared Work Product, the Company understands and agrees that
Zweig and its Affiliates shall also retain copies of such documentation and
information.
7. Prior Negotiations and Agreements
This Agreement contains the complete agreement concerning the
servicing arrangement between the parties. This Agreement may only be altered,
amended or rescinded by a duly executed written agreement.
8. Jurisdiction
This Agreement shall be construed in accordance with and
governed by the laws of the State of New York governing contracts entered into
and to be performed entirely within New York without regard to any conflict of
law rules and both parties consent to the jurisdiction of the courts of New
York.
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<PAGE> 30
9. Performance Waivers
Waiver of performance of any obligation by either party shall
not constitute a waiver of performance of any other obligations or constitute
future waiver of the same obligation.
10. Severability
If any section, subsection, clause or sentence of this
Agreement shall be deemed illegal, invalid or unenforceable under any applicable
law, actually applied by any court of competent jurisdiction, such illegality,
invalidity or unenforceability shall not affect the legality, validity and
enforceability of this Agreement or any other section, subsection, clause or
sentence thereof. Where, however, the provisions of any applicable law may be
waived, they are hereby waived by the parties to the full extent permitted by
such law to the end that this Agreement shall be a valid and binding agreement
enforceable in accordance with its terms.
11. Assignment
This Agreement shall inure to the benefit of and be binding
upon the Company and its successors (whether direct or indirect, by purchase,
merger, consolidation or otherwise) and assigns, and upon Zweig and its
successors and assigns (whether direct or indirect, by purchase, merger,
consolidation or otherwise). Except as provided in Section 2.2, this Agreement
shall not be assignable by Zweig other than with the express written consent of
the Company which shall not be unreasonably denied. The reorganization of Zweig
and its affiliated entities, such that the Services of the President and the
Associates are provided through an affiliated entity, shall not constitute a
breach, assignment or termination of this Agreement by Zweig.
12. Notices
All notices under this Agreement shall be in writing and shall
be deemed to have been given at the time when mailed by registered or certified
mail, addressed to the address below stated of the party to which notice is
given, or to such changed address as such party may have fixed by notice:
To the Company: Zweig/Glaser Advisers
900 Third Avenue
New York, New York 10022
Attention: Eugene Glaser
Telephone: (212) 451-1100
Facsimile: (212) 451-1494
and
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<PAGE> 31
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, Connecticut 06115-0480
Attention: Thomas N. Steenburg, Esq.
Vice President and General Counsel
Telephone: (860) 403-5261
Facsimile: (860) 403-7600
To Zweig: Zweig Consulting LLC
900 Third Avenue
New York, New York 10022
Attention: Martin E. Zweig
Telephone: (212) 451-1100
Facsimile: (212) 451-1494
provided, however, that any notice of change of address shall be effective only
upon receipt.
13. Miscellaneous
The President hereby represents and warrants that this
Agreement (i) is valid, binding and enforceable in accordance with its terms and
(ii) does not conflict with any other agreement to which he is a party,
including any agreement with the Affiliated Investment Partnership Management
Companies and the related investment partnerships and Watermark Securities, Inc.
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<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
Very truly yours,
ZWEIG/GLASER ADVISERS
By:________________________
Name:
Title:
ZWEIG TOTAL RETURN ADVISORS, INC.
By:________________________
Name:
Title:
ZWEIG ADVISORS INC.
By:________________________
Name:
Title:
ACCEPTED AND AGREED TO:
ZWEIG CONSULTING LLC
By:_____________________________
Name: Martin E. Zweig
Title: President
ACCEPTED AND AGREED TO AS
TO SECTIONS 4.1 and 13
________________________________
Martin E. Zweig
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<PAGE> 33
THE ZWEIG TOTAL RETURN FUND, INC.
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 25, 1999
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned shareholder of The Zweig Total Return Fund, Inc., a
Maryland corporation (the "Fund"), hereby appoints MARTIN E. ZWEIG and JEFFREY
LAZAR, and each of them, with full power of substitution and revocation, as
proxies to represent the undersigned at the Special Meeting of Shareholders of
the Fund to be held at the offices of Rosenman & Colin LLP, 575 Madison Avenue,
11th Floor, New York, New York 10022, on February 25, 1999 at 2:30 p.m., at any
and all adjournments thereof, and to vote at the Special Meeting all shares of
the Fund which the undersigned would be entitled to vote, with all powers the
undersigned would possess if personally present in accordance with the
instructions on the reverse side of this proxy.
WHEN THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY
WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR THE APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT AND SERVICING
AGREEMENT AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO ALL OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF. THE
UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE ACCOMPANYING NOTICE OF SPECIAL MEETING
AND PROXY STATEMENT.
(CONTINUED, AND TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
<PAGE> 34
PLEASE MARK BOXES |--| OR |X| IN BLUE OR BLACK INK.
1. With respect to the proposal to approve the new Investment Advisory
Agreement with Zweig Total Return Advisors, Inc. and the new Servicing
Agreement with Zweig Consulting LLC:
FOR |_| AGAINST |_| ABSTAIN |_|
2. In their discretion, on such other matters as may properly come before
the meeting and any adjournments thereof.
Please sign exactly as name or names
appear on this proxy. If stock is held
jointly, each holder should sign. If
signing as attorney, trustee, executor,
administrator, custodian, guardian or
corporate officer, please give full
title.
Dated: ___________________, 1999
_________________________________
Signature
_________________________________
Signature
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
