<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
The Zweig Total Return Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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 0-11.
(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:
<PAGE> 2
THE ZWEIG TOTAL RETURN FUND, INC.
900 THIRD AVENUE, NEW YORK, NEW YORK 10022
January 19, 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 via the internet, 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 SHAREHOLDER COMMUNICATIONS
CORPORATION AT 1-800-401-3439. 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) (a) 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;
(b) To approve 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 19, 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 ELECTRONICALLY VIA THE
INTERNET, 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
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 19, 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 with
respect to either the proposal to approve the new investment advisory agreement
with Zweig Total Return Advisors, Inc. (the "Investment Adviser"), or the
proposal to approve the new servicing agreement for the rendering of
sub-advisory services with Zweig Consulting LLC (the "Sub-Adviser") will be
voted FOR such proposal. In order for either proposal to be approved, both must
be approved. 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 SHAREHOLDER COMMUNICATIONS CORPORATION AT
1-800-401-3439.
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 19, 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 76,324(2)(3)*
900 Third Avenue and President
New York, NY 10022
Charles H. Brunie............................... Director 14,251
21 Elm Rock Road
Bronxville, NY 10708
Annemarie Gilly................................. Director 240(4)*
900 Third Avenue
New York, NY 10022
Eugene J. Glaser................................ Director 3,595(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 2,464(4)(5)*
900 Third Avenue and 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
Stuart B. Panish................................ Vice President and 406
900 Third Avenue Secretary
New York, NY 10022
All Directors and Executive Officers as a group........................... 104,985
</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
2
<PAGE> 6
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 48,043 shares owned by an affiliate, as to which he has shared
voting and investment power.
(3) Includes 802 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 502 shares owned by Mr. Lazar's individual retirement account, as
to which he has sole voting and investment power.
PROPOSAL 1(a) AND 1(b)
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 dated as of December 15, 1998 (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 $53 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 (as Proposal 1(a)) 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
3
<PAGE> 7
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 (as Proposal 1(b)) 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.
After completion of the Acquisition, Phoenix may determine to cause some or
all of the Investment Adviser, the Administrator, Zweig Advisors Inc. and Euclid
Advisors LLC to be merged or otherwise combined into a single existing or
newly-created wholly owned subsidiary of Phoenix that is or will be a registered
investment adviser. Although such a merger or combination may involve a transfer
of the Investment Advisory Agreement and the Servicing Agreement to such
subsidiary, such a transfer would not involve a change in the identity of the
persons in control of the Investment Adviser or Sub-Adviser to the Fund and,
therefore, should not constitute an "assignment" (as defined in the 1940 Act)
resulting in the automatic termination of the Investment Advisory Agreement and
the Servicing Agreement. However, in order to avoid any question, the approval
by shareholders of the Fund of both the Investment Advisory Agreement and the
Servicing Agreement at the Meeting will also be deemed to constitute approval of
the continuation of the Investment Advisory Agreement and Servicing Agreement
with any subsidiary of Phoenix that becomes the successor to the Investment
Adviser.
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 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
$5,058,942.65. 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 $50,859.02, 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 $22,385.35 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
4
<PAGE> 8
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.
The Investment Advisory Agreement will remain in effect for a period of two
years from the date of its commencement and thereafter 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" (as defined in the 1940 Act) 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."
5
<PAGE> 9
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
NAME THE INVESTMENT ADVISER PRINCIPAL OCCUPATION
---- ---------------------- --------------------
<S> <C> <C>
Martin E. Zweig............. President, Director and Chairman, President and Director, The Zweig
Shareholder Fund, Inc. 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
Secretary and Shareholder Zweig Fund, Inc. and The Zweig Total Return
Fund, Inc.; Vice 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 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.
6
<PAGE> 10
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 the Advisers'
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) days' written notice. With respect to
the Fund, the Servicing Agreement shall automatically terminate upon its
"assignment" (as defined in the 1940 Act) 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.
The Advisers agree, on a joint and several basis, to pay the Sub-Adviser,
on a monthly basis, an annual consulting fee of $2,500,000 ("Consulting Fees").
The Consulting Fees shall be allocated among the Advisers based on the assets of
the investment companies managed by each of the Advisers. The Sub-Adviser will
also receive research benefits along with the Advisers from the brokerage
transactions for their clients' accounts by the Advisers in accordance with the
provisions of 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.
7
<PAGE> 11
THE SUB-ADVISER
The Sub-Adviser is a New York limited liability company which is controlled
by Dr. Zweig. The address of the Sub-Adviser is 900 Third Avenue, New York, New
York 10022. The names and principal occupations of the executive officers 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
$939,518.00 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, 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 $53 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).
8
<PAGE> 12
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.
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. He is
Vice President and Counsel of PEPCO.
</TABLE>
9
<PAGE> 13
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
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 each of
the Phoenix Funds, 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 present value (at
a 12% discount rate) of the ultimate purchase price as of the closing date 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 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.
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.
10
<PAGE> 14
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
(Proposal 1(a)) and Servicing Agreement (Proposal 1(b)).
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 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 each 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
11
<PAGE> 15
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 those 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.
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 any resulting 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
responded to questions by the Board.
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
12
<PAGE> 16
predecessors, has been engaged in the investment management business since 1932.
Phoenix has extensive experience managing investment companies. As of December
31, 1998, Phoenix had over $53 billion in assets under management, including
$19.3 billion in institutional accounts, $3.5 billion in closed-end investment
companies, $10.2 billion in open-end investment companies, 11.3 billion in other
managed account programs, and $8.8 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 Chairman and
President of the Fund.
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 that
shareholders approve the new Investment Advisory Agreement (Proposal 1(a)) and
the new Servicing Agreement (Proposal 1(b)).
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE NEW INVESTMENT
ADVISORY AGREEMENT AND "FOR" THE NEW SERVICING AGREEMENT. APPROVAL OF EACH
AGREEMENT IS CONTINGENT UPON THE APPROVAL OF BOTH AGREEMENTS.
13
<PAGE> 17
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 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 have retained Shareholder Communications Corporation, 17 State Street, New
York, New York 10004, 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 each of the new Investment Advisory Agreement (Proposal
1(a)) and Servicing Agreement (Proposal 1(b)) 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 matters to be voted upon by the shareholders are 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 via the internet may be
counted if obtained pursuant to procedures designed to verify that such
instructions have been authorized. In order to vote by internet or by touch-tone
telephone, you need the 12-digit Control Number found on your proxy card. To
vote by internet, go to www.proxyvote.com, enter your 12-digit Control Number
and follow the simple instructions at the web site. To vote by touch-tone
telephone, call 1-800-690-6903, enter your 12-digit Control Number and follow
the simple instructions.
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. and other parties (none of whom are affiliated with Dr. Zweig or
the Investment Adviser) 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,
14
<PAGE> 18
conspiracy and for imposition of a constructive trust. Zweig Advisors Inc.
believes that it was improperly named as a defendant because (unlike other Zweig
entities) it never traded in Solv-Ex stock. Nevertheless, if the outcome of the
action is unfavorable for Zweig Advisors Inc., it is possible that Zweig
Advisors Inc. may have some liability in this matter.
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.
By Order of the Board of Directors
MARTIN E. ZWEIG,
Chairman of the Board
New York, New York
January 19, 1999
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, and/or retain others to perform some or all of
such services, 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 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;
A-1
<PAGE> 20
(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 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
A-2
<PAGE> 21
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 (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.
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<PAGE> 22
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.
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:
- -------------------------------------------------------
ATTEST:
- -------------------------------------------------------
THE ZWEIG TOTAL RETURN FUND, INC.
By:
- ---------------------------------------------------
President
ZWEIG TOTAL RETURN ADVISORS, INC.
By:
- ---------------------------------------------------
President
A-4
<PAGE> 23
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.
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.
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<PAGE> 24
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 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, on a joint and several basis, to pay Zweig an
annual consulting fee equal to $2,500,000 (the "Consulting Fees"). The
Consulting Fees shall be payable monthly in arrears on the fifth day of each
month.
B-2
<PAGE> 25
The Company shall allocate the Consulting Fees among the advisers comprising the
Company based on the assets of each Fund managed by such advisers.
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 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
B-3
<PAGE> 26
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 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
B-4
<PAGE> 27
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.
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.
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<PAGE> 28
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
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, Connecticut 06115-0480
Attention: Thomas N. Steenburg, Esq.
Vice President and General Counsel
To Zweig: Zweig Consulting LLC
900 Third Avenue
New York, New York 10022
Attention: Martin E. Zweig
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> 29
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> 30
THE ZWEIG TOTAL RETURN FUND, INC.
900 THIRD AVENUE
NEW YORK, NY 10022
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., and 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 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.
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.
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope, or
by telephone or via the Internet in accordance with instruction contained in
box on left.
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- - To vote by mail, sign below exactly as your name appears above and return the
Card in the envelope provided
- - To vote by touch-tone phone, call 1-800-690-6903
- - To vote by Internet, use website www.proxyvote.com
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: /X/
ZWFUND KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE ZWEIG TOTAL RETURN FUND, INC.
Vote On Proposals
For Against Abstain
1(a). To approve a new Investment Advisory
Agreement. / / / / / /
1(b). To approve a new Servicing Agreement.
(An "against" or an "abstain" vote on / / / / / /
1(a) or 1(b) constitutes a "No" vote
on both.)
2. In their discretion, on such other
matters as may properly come before the
meeting and any adjournments thereof.
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Signature Date Signature Date
(PLEASE SIGN WITHIN BOX) (Joint Owners)
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