SCHEDULE 14A
[ 40,151] Information Required by Proxy Statement
Reg. 240.14a-101.
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
(Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
THE BERWYN
FUND, INC.
(Name of Registrant as Specified In Its Charter)
KEVIN
M.
RYAN
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ x ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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.:
THE BERWYN FUND, INC.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
Robert E. Killen and Kevin M. Ryan, or either of them, with power of
substitution, are hereby authorized as proxies to represent, and to
vote the shares of common stock (the "Shares") of The Berwyn Fund,
Inc., owned by the undersigned shareholder(s) at the Annual Meeting of
Shareholders of the Fund, to be held at 10:00 a.m., Friday, March 27,
1998 at 1199 Lancaster Avenue, Berwyn, Pennsylvania, and at any
adjournment thereof. The proxies are to vote the Shares of the
undersigned as instructed below and in accordance with their judgment
on all other matters which may properly come before the meeting. If
no specification is made, this proxy shall be voted in favor of each
listed proposal (including each nominee for Director).
The Board of Directors recommends voting for Proposals 1, 2, and 3.
1. Election of Directors:
Nominees: Robert E. Killen, Anthony N. Carrelli, Denis P. Conlon,
Kevin M. Ryan, and
William H. Vonier.
For All Nominees____ Withhold All Nominees____
Withhold Those Listed Below____
Instruction: To withhold authority to vote for any individual
nominee, please print his name below:
2. Annual continuation of contract for Investment Advisory Agreement:
Approve____ Disapprove____ Abstains
3. Ratification of Price Waterhouse, LLP as independent accountants:
For____ Against____ Abstain____
Please sign and date this proxy and return it promptly in the enclosed
envelope.
_____________________________________
Dated____________________, 1998
_____________________________________
Dated____________________, 1998
Joint Tenant (if any)
Please check here if planning to attend the Annual
Meeting of Shareholders.
Please check here if you have comments and use back of
form.
YOUR VOTE IS IMPORTANT
THE BERWYN FUND, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 27, 1998
BERWYN, PENNSYLVANIA
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of The
Berwyn Fund, Inc. (the "Fund"), a registered investment company, will
be held at the executive offices of The Killen Group, Inc., 1199
Lancaster Avenue, Berwyn, Pennsylvania, on Friday, March 27, 1998 at
10:00 a.m., for the following purposes:
1. To elect 5 Directors to serve until the next annual
meeting of shareholders and until their successors are
elected;
2. To consider and approve the Investment Advisory Agreement
between the Fund and The Killen Group, Inc. for the period
from March 27, 1998 to March 26, 1999, or until the next
annual meeting of shareholders;
3. To consider and ratify the appointment of Price
Waterhouse, LLP as independent accountants for the fiscal
year ending December 31, 1998.
At such meeting, only holders of common stock of record at the close
of business on February 12, 1998 will be entitled to vote.
You are encouraged to attend this meeting in person, but if you
cannot do so, please complete, date, sign and return the accompanying
proxy at your earliest convenience. YOUR PARTICIPATION, IN PERSON OR
BY PROXY, IS IMPORTANT. BUSINESS MAY BE TRANSACTED ONLY IF A
MAJORITY OF THE SHARES ENTITLED TO VOTE ARE PRESENT IN PERSON OR BY
PROXY.
By Order of the
Board of Directors
Kevin M. Ryan
Secretary
February 13, 1998
PROXY STATEMENT
SOLICITATION, REVOCATION AND VOTING OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of
Directors of The Berwyn Fund, Inc. (the "Fund"), for use at the Annual
Meeting of Shareholders (the "Annual Meeting") or any adjournment
thereof, to be held on March 27, 1998 at 10:00 a.m., at the executive
offices of The Killen Group, Inc. (the "Adviser" or "Killen Group"), 1199
Lancaster Avenue, Berwyn, Pennsylvania. The Fund's address is 1189
Lancaster Avenue, Berwyn, Pennsylvania 19312. This proxy statement and
the enclosed proxy are first being sent to shareholders of the Fund (the
"Shareholders") on or about March 2, 1998. The close of business on
February 12, 1998 has been fixed as the record date for the determination
of shareholders entitled to vote at the Annual Meeting. On that date
there were, outstanding, 4,489,055 shares of common stock. (The Fund
issues only common stock.) Shareholders will be entitled to one vote on
each matter for each share held.
A majority of the shares entitled to vote, represented in person or by
proxy, will constitute a quorum and the presence of a quorum is necessary
for the transaction of business. Abstentions and broker non-votes will
be included for purposes of determining whether a quorum is present at
the meeting, but will be treated as votes not cast and, therefore, will
not be counted in determining whether matters to be voted upon at the
meeting have been approved.
Approval of the proposed contract for Investment Advisory Services
between the Fund and the Adviser (the "Advisory Agreement") requires
approval by a vote of a majority of the Fund's outstanding voting
securities as defined in the Investment Company Act of 1940, as amended
(the "1940 Act"). Under the 1940 Act, such approval means the
affirmative vote at a meeting of shareholders of the lesser of (a) more
than 50% of the Fund's outstanding shares, or (b) 67% or more of the
shares present or represented by proxy at the meeting, if the holders of
more than 50% of the Fund's outstanding shares are present in person or
represented by proxy. The election of the nominees for Director and the
ratification of the appointment of Price Waterhouse, LLP as independent
accountants for the Fund (Proposals 1 and 3 below) will require the
affirmative vote of a majority of shares present at the meeting either in
person or by proxy.
All shares represented by properly executed proxies, unless such proxies
have been previously revoked, will be voted at the Annual Meeting in
accordance with the directions on the proxies. A shareholder who
executes and returns a proxy may revoke it at any time prior to its
exercise by delivering to the Secretary of the Fund written notice of its
revocation, sending the Fund a proxy with a later date, or voting in
person at the meeting. The cost of soliciting proxies, which is
estimated at $2,500, is being paid by the Fund. In addition to
solicitation by mail, Officers and employees of the fund may ask
Shareholders to return proxies in personal conversations or by telephone
or telecopy.
Since the Fund is bearing all proxy solicitation costs, it is requested
that Shareholders, who will not attend the meeting, execute and return a
proxy so as to avoid any additional solicitation expense.
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OWNERSHIP OF SHARES
Shareholders known by the Board of Directors to own more than 5% of the
outstanding shares of the Fund
on February 12, 1998 and the percentage of the outstanding shares owned on
that date are listed below.
Name of Shareholder Amount of Percentage of
and Address Shares Owned Outstanding Shares
Charles Schwab & Co. (1) 886,043 20%
101 Montgomery Street
San Francisco, CA
National Financial Services Corp. (1) 342,320 8%
1 World Financial Center
200 Liberty Street
New York, NY
(1) Indicates owner of record; such record owner is a financial institution
or registered broker dealer and holds these shares for the benefit of its
customers.
To the Fund's knowledge, no person beneficially owned more than 5% of the
oustanding shares of the Fund on February 12, 1998.
PROPOSAL 1. NOMINEES FOR ELECTION AS DIRECTORS
Five Directors are to be elected to serve on the Board of Directors of the
Fund (the "Board) until the next Annual Meeting and until their successors
are elected. The Board's nominees are named in the following table, which
also sets forth information about each of them concerning age, principal
occupation, business experience for at least the past five years, and
ownership of Fund shares. Robert E. Killen, Anthony N. Carrelli, Denis P.
Conlon, Kevin M. Ryan and William H. Vonier are currently members of the
Fund's Board of Directors and all are nominees for election.
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Number of Shares
Principal Occupation Beneficially
and Other Business Owned & Percent
Experience During the of Class as of
Name (Age) Past Five Years February 12, 1998
*Robert E. Killen Director and shareholder, Berwyn Financial Services 205,110
(56) Corp. ("BFS"), a financial services company
(registered (1)
as a broker-dealer with the U.S. Securities and
Exchange (4.5%)
Commission (the "SEC") since December 1993 and a
member of the National Association of Securities
Dealers,
Inc. (the "NASD" since July 1994) since October
1991.
President and Director of The Berwyn Fund, Inc.,
since
February 1983. President and Director of Berwyn
Income
Fund, Inc., since December 1986. Director of
Westmoreland
Coal Co. (a mining company) since July 1996.
Chairman,
CEO and sole shareholder of Killen Group, (an
investment
advisory firm and the investment adviser to the
Fund)
since April 1996. President, Treasurer, Director
and sole
shareholder of Killen Group, from September 1982 to
March 1996.
Denis P. Conlon Director of The Berwyn Fund, Inc. and Berwyn Income 2,067
(49) Fund, Inc., since June 1992. President and CEO of
CRC +
Industries, Inc., (a worldwide manufacturer of
chemical
specialties for industrial and automatic markets)
since
September 1996. Vice President, Corporate Develop-
ment, Berwind Corporation (diversified manufacturing
and financial company) from 1990 to September 1996.
*Anthony N. Carrelli Director of Berwyn Income Fund, Inc. since December 8,395
(49) 1986. Director of The Berwyn Fund, Inc., since
January (2)
1995. Vice President of Killen Group (an investment +
firm and the investment adviser to the Fund) since
August 1986.
*Kevin M. Ryan President, Treasurer, Director and Shareholder of
BFS, 19,651
(50) a financial services company (registered as a
broker- (3)
dealer with the SEC December 1993 and a member of +
the NASD since July 1994) since October 1991.
Registered Principal with Securities America, Inc.
(a
broker-dealer) from March 1993 to August 1994.
Secretary, Treasurer and Director of The Berwyn
Fund,
Inc., since February 1983. Secretary and Treasurer
of
- -4-
Number of Shares
Principal Occupation Beneficially
and Other Business Owned & Percent
Experience During the of Class as of
Name (Age) Past Five Years February 12, 1998
Berwyn Income Fund, Inc., since 1986. Director of
Berwyn Income Fund, Inc., from December 1986
to
January 1995. Legal Counsel to Killen Group,
(an
investment advisory firm and the investment adviser
to the Fund) since September 1985.
William H. Vonier Director of The Berwyn Fund, Inc. and Berwyn Income 11,692
(69) Fund, Inc., since June 1992. Independent Consultant +
in Sales and Marketing since 1989.
All Directors and Officers of the Fund as a group owned 246,915 shares of
the Fund, which constitutes 5.5% of its outstanding shares as of February
12, 1998.
Notes:
(1) The shares listed for Robert E. Killen include shares owned by The
Killen Group, Inc. and by his wife.
(2) Shares listed for Anthony N. Carrelli include shares beneficially
owned by members of his immediate family.
(3) Shares listed for Kevin M. Ryan include shares owned by his wife
and by a partnership of which he is a General Partner.
* Robert E. Killen, Anthony N. Carrelli and Kevin M. Ryan are
interested persons of the Fund, as defined in the 1940 Act (the
"Interested Directors"). Robert E. Killen is an Officer, Director
and sole shareholder in Killen Group, the Investment Adviser to
the Fund. He is also a Director and owner of 1/3 of the
outstanding shares of BFS, a broker-dealer. Anthony N. Carrelli
is a Vice President of The Killen Group, Inc. Kevin M. Ryan is
legal counsel to Killen Group and he is an Officer, Director and
the owner of 1/3 of the outstanding shares of BFS, a broker-
dealer. In addition, Robert E. Killen and Kevin M. Ryan are
brothers-in-law. BFS serves as the selling agent for the Fund in
certain jurisdictions.
+ Indicates ownership of less than 1% of the outstanding shares of
the Fund.
The Board of Directors sets broad policies for the Fund and elects
the Officers. The Officers are Robert E. Killen, President, and
Kevin M. Ryan, Secretary-Treasurer. The Officers of the Fund manage
its daily operations and are directly responsible to the Directors.
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The Board held four meetings in the Fund's fiscal year ended December
31, 1997 (the "1997 fiscal year") and all Directors were present at
each meeting. The Board has an Audit Committee composed of Messrs.
Conlon and Vonier each of whom is not an "interested person" of the
Fund, as that term is defined in the 1940 Act (the "Independent
Directors"). The Audit Committee recommends the selection of
independent public accountants for the Fund, reviews the scope of the
audit and evaluates the independent accountants' work and opinions and
reports its findings to the Board. The Audit Committee did not meet
in 1997. In past years, the Audit Committee met with the Fund's
independent accountants at the start of the audit. In 1997, the Audit
Committee decided to meet with the independent accountants at the
conclusion of the audit. The Audit Committee will meet with the
Fund's independent accountants in 1998 at the conclusion of the 1997
audit.
The Independent Directors are paid a fee of $400 for each Board or
Committee meeting attended and are reimbursed for any travel expenses.
If a Board and Committee meeting are held on the same date, the
Independent Directors receive only one fee. In the 1997 fiscal year,
Messrs. Conlon and Vonier were paid Directors' fees of $1,600 and
$1,600, respectively from the Fund. Messrs. Conlon and Vonier also
serve as Independent Directors of Berwyn Income Fund, Inc. (another
registered investment company managed by the Adviser and together with
the Fund, the "Funds"). In the fiscal year ended December 31, 1997 of
The Berwyn Income Fund, Inc., Messrs. Conlon and Vonier received
$1,600 and $1,600, respectively, in Directors' fees from Berwyn Income
Fund, Inc. The total payment from both Funds to Messrs. Conlon and
Vonier was $3,200 and $3,200, respectively for the 1997 fiscal year.
Officers of the Fund are not paid compensation by the Fund for their
work as Officers and no fees are paid to Interested Directors for the
performance of their duties.
PROPOSAL 2. INVESTMENT ADVISORY AGREEMENT
Investment Adviser
Killen Group currently serves as the investment adviser to the Fund.
The Adviser is a Pennsylvania corporation formed in September 1982
and its offices are located at 1199 Lancaster Avenue, Berwyn,
Pennsylvania 19312.
The Officers and Directors of the Adviser are Robert E. Killen,
Chairman, CEO and Treasurer, William A. Siegenthaler, Chief Operating
Officer and Director, Edward A. Killen II, Executive Vice President,
Secretary and Director, and Anthony N. Carrelli, Vice President, and
Tara J. Killen, Director. The address of each officer is 1199
Lancaster Ave., Berwyn, Pennsylvania 19312.
Robert E. Killen has worked as an investment adviser since 1969. In
that year, he co-founded the partnership of Compu Val Management
Associates (an investment advisory firm) and was a partner until
February 1983 when he was replaced by the Adviser as a general
partner.
In December, 1983, the partnership of Compu Val Management Associates
was dissolved.
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William A. Siegenthaler has been the Chief Operating Officer of the
Adviser since April 1996. Prior to that he was manager of the
Capital Markets Department of Electronic Data Systems Corporation,
Wayne, Pennsylvania from March 1995 to March 1996.
Tara J. Killen has been employed as a writer by First News Corp.,
Boca Raton, Florida since September 1997. From June 1994 to June
1997, she was employed by the Adviser as an assistant portfolio
manager and supervisor for mutual fund communications.
Edward A. Killen II was Portfolio Manager for Compu Val Management
Associates from 1976 until September 1983. At that time he assumed
his present position with the Adviser.
Robert E. Killen is Chairman of the Board and President of the Fund
and currently a nominee for election as a Director. Anthony N.
Carrelli, a Vice President of the Adviser and Kevin M. Ryan, Legal
Counsel to the Adviser, are currently members of the Board and
nominees for election as Directors at the Annual Meeting.
Advisory Agreement
The Adviser serves as investment adviser to the Fund pursuant to a
written Advisory Agreement, May 14, 1993. Under the terms of the
Advisory Agreement, the Adviser provides the Fund with advice and
recommendations with respect to investments, investment policies, the
purchase and sale of securities and other investments, and the
management of the Fund's resources.
In addition to providing investment services to the Fund, the Adviser
provides and furnishes office space for the Fund and provides
personnel to administer the Fund's operations. The Adviser also pays
all expenses associated with the sales promotion of the Fund.
As compensation for investment services, under the Advisory
Agreement, the Fund has agreed to pay the Adviser monthly
compensation at the annual rate of 1% of the average daily net assets
of the Fund. This fee is higher than that of most mutual funds. In
the 1997 fiscal year, the Adviser received advisory fees from the
Fund totaling $947,901. The Advisory Agreement provides that the
Adviser's fee will be reduced in any fiscal year by any amount
necessary to prevent the Fund's expenses and liabilities (excluding
taxes, interest, brokerage commissions and extraordinary expenses,
determined by the Fund or Adviser, but inclusive of the Adviser's
fee) from exceeding 2% of the average daily net assets of the Fund
(1-1/2% when net assets of the Fund are over $100 million). This
expense limitation did not affect the Adviser's fee in 1997.
The Advisory Agreement is terminable at any time without penalty on 60
days written notice by the Board of Directors and will terminate
automatically in the event it is assigned. The Advisory Agreement is
also terminable at any time without penalty by a vote of a majority of
the outstanding shares on 60 days written notice. The Adviser may
terminate the Agreement by written notice to the Fund at least 60 days
prior to the date of the annual shareholder meeting of any year
thereafter. The Advisory Agreement provides that, unless sooner
terminated, it will continue in effect from year to
- -7-
year provided that such continuance is specifically approved at least
annually by a vote of a majority of the outstanding shares of the Fund
as defined in the 1940 Act. Continuance of the Advisory Agreement
also must be approved by the Independent Directors of the Fund
annually. The Board of Directors of the Fund, including the
Independent Directors, unanimously approved continuance of the
Advisory Agreement at a meeting held on January 20, 1998.
In making its recommendation to continue the Advisory Agreement, the
Board considered a number of factors. These factors were the
performance of the Fund in 1997 and for the last ten years, the nature
and quality of the services provided by the Adviser and the Adviser's
fee and the expenses of the Fund in comparison to other mutual funds
with a similar investment objective. The Board was also aware that
the Adviser placed portfolio transactions through brokers affiliated
with the Adviser and the Fund and that the Adviser allocated portfolio
transactions to brokers that sold shares of the Fund and that provided
research to the Adviser.
Prior to the Board meeting held on January 20, 1998, the members of
the Board were provided with a memorandum prepared by the Adviser that
detailed the experience of the Fund's portfolio manager, the services
provided by the Adviser and the number of employees engaged in
providing those services. Also provided in the memorandum was the
annual performance of the Fund for the last ten years as well as the
annual average total return for 1, 5 and 10 years. The annual
performance was compared to the performance of a relevant index. The
memorandum listed the total amount of fees paid to the Adviser for the
1997, the ratio of expenses to average net assets for the year and the
rate at which the Fund pays the Adviser.
In addition to the Adviser's memorandum, the members of the Board were
provided with information which compared the various expenses and fees
of funds with similar investment objectives to the Fund's expenses and
fees.
After a discussion regarding the Advisory Agreement, the Board
unanimously determined that it was in the best interest of the Fund's
shareholders to continue the Advisory Agreement. The Board determined
that the performance of the Fund in 1997 was satisfactory and that the
performance of the Fund and the level and quality of services provided
by the Adviser over the last ten years had been satisfactory. The
Board also determined that the fee charged by the Adviser was fair and
reasonable considering the nature and quality of the services provided
to the Fund and the other factors described above.
The terms of the Advisory Agreement require that the renewal of the
agreement be submitted to the shareholders of the Fund at the Annual
Meeting for their approval. The Advisory Agreement was last submitted
for shareholder approval at the Annual Meeting of Shareholders held
on March 27, 1997. At that time, the Advisory Agreement was
approved. No changes have been made in the Advisory Agreement since
March 27, 1997.
A copy of the Advisory Agreement is attached as Appendix A.
The Board recommends approval by Shareholders of the Advisory
Agreement.
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Affiliated Brokers
The Fund places a portion of its portfolio transactions through
brokers affiliated with the Adviser and the Fund. In the 1997 fiscal
year, the affiliated broker used by the Fund was BFS. BFS is
affiliated with the Adviser and Fund by reason of the fact that
Officers and Directors of the Fund and the Adviser are Officers,
Directors and shareholders of BFS. In addition, BFS serves as the
selling agent for the Fund in various jurisdictions pursuant to
written agreement.
In the fiscal year ended 1997, the Fund paid a total of $115,779 in
commissions to BFS. This amount represents 50% of the total
commissions paid by the Fund during 1997.
PROPOSAL 3. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board is requesting ratification of the selection of Price
Waterhouse, LLP as independent accountants of the Fund for the fiscal
year ending December 31, 1998. Price Waterhouse, LLP has served as
independent accountants for the Fund since it began operation.
No representative of Price Waterhouse, LLP is expected to be present
or make a statement at the Annual Meeting.
The Board recommends the ratification by Shareholders of such
selection of Price Waterhouse, LLP as independent accountants for the
Fund.
Shareholder Proposals
The next Annual Meeting of Shareholders will be held on March 26,
1999. Proposals of Shareholders intended to be presented at the 1999
Annual Meeting of shareholders must be received by the Fund by
November 1, 1998 for inclusion in the Fund's Proxy Statement and
Proxy relating to that Meeting. Upon receipt of any such proposal,
the Fund will determine whether or not to include such proposal in
the Proxy Statement and Proxy, in accordance with regulations
governing the solicitation of proxies.
By Order of
the Board of Directors
Kevin M. Ryan
Secretary
February 13, 1998
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APPENDIX A
CONTRACT FOR
INVESTMENT ADVISORY SERVICES
Agreement made on May 14, 1993 between The Berwyn Fund, Inc., a
Pennsylvania corporation, having its principal place of business at
1189 Lancaster Avenue, Berwyn, Pennsylvania, herein referred to as
the Fund, and The Killen Group, Inc., a Pennsylvania corporation,
having its principal place of business at 1189 Lancaster Avenue,
Berwyn, Pennsylvania, herein referred to as the Adviser.
l. The Fund shall register with the Securities and Exchange
Commission as a non-diversified, open-end management investment
company under the provisions of the Investment Company Act of
1940 and shall qualify to engage in business under said act and
other applicable federal and state statutes.
2. The Adviser is registered under the Investment Advisers Act and
is engaged in the business of acting as an Investment Adviser
and rendering research and Advisory services.
3. The Fund desires to retain the Adviser to render such services
to the Fund in the manner and on the terms and conditions
hereinafter set forth.
4. Nothing contained herein shall be deemed to require the Fund to
take any action contrary to its certificate of incorporation or
any applicable statute or regulation, or to relieve or deprive
the Board of Directors of the Fund of its responsibility for,
and control of, the conduct of the affairs of the Fund.
For the reasons recited above, and in consideration of the mutual
promises contained herein, the Fund and Adviser agree as follows:
SECTION ONE
INVESTMENT ADVICE AND OTHER SERVICES
a. Adviser shall to the extent reasonably required in the
conduct of the business of the Fund, place at the disposal of the
Fund, its judgment and experience and furnish to the Fund advice and
recommendations with respect to investments, investment policies, the
purchase and sale of securities, and the management of its resources.
Adviser shall also, from time to time, furnish to or place at the
disposal of the Fund such reports and information relating to
industries, businesses, corporations or securities as may be
reasonably required by the Fund or as Adviser may deem to be helpful
to the Fund in the administration of its investments.
b. Adviser agrees to use its best efforts in the furnishing
of such advice and recom-mendations and in the preparation of such
reports and information, and for this purpose Adviser shall at all
times maintain a staff of Officers and other trained personnel for
the performance of its obligations under this agreement. Adviser,
may at its expense, employ other persons to furnish to Adviser
statistical and other factual information, advice regarding economic
factors and trends, information with respect to technical and
scientific developments and such other information, and advice and
assistance as Adviser may desire.
c. The Fund will from time to time furnish to Adviser
detailed statements of the investments and resources of the Fund and
information as to its investment problems, and will make available to
Adviser such financial reports, proxy statements, and legal and other
information relating to its investments as may be in possession of
the Fund or available to it.
SECTION TWO
COMPENSATION TO INVESTMENT ADVISER
a. The Fund agrees to pay to Adviser and Adviser agrees to
accept, as full compensation for all services rendered and as full
reimbursement for all expenses assumed by Adviser hereunder, an
annual fee equal to l.0% of the average daily net assets of the Fund.
The fee will be paid monthly.
b. Adviser agrees that neither it nor any of its Officers or
Directors shall take any long or short position in the capital stock
of the Fund; but this prohibition shall not prevent the purchase by
or for Adviser or any of its Officers or Directors of shares of the
capital stock of the Fund at the price at which such shares are
available to the public at the moment of purchase provided that (1)
such purchase be made for investment purposes only and (2) if any
shares of stock so purchased are resold within two months after the
date of purchase, such fact will be immediately reported to the Fund.
SECTION THREE
PAYMENT OF EXPENSES
The Adviser shall provide and furnish office space to the Fund and
provide personnel to administer the Fund's operations. The Adviser
shall pay all expenses associated with the sales promotion of the
Fund. The Fund will pay all other expenses incurred in the operation
of the Fund.
The Adviser hereby agrees to reduce its fee in any fiscal year by any
amount necessary to prevent Fund expenses and liabilities (excluding
taxes, interest, brokerage commissions and extraordinary expenses,
determined by the Fund or Adviser, but inclusive of the Adviser's
fee) from exceeding 2%
of the net assets of the Fund. When the net assets of the Fund
exceed $100 million, the Adviser agrees to reduce its fee in any
fiscal year by any amount necessary to prevent Fund expenses and
liabilities (excluding taxes, interest, brokerage commissions and
extraordinary expenses, determined by the Fund or Adviser, but
inclusive of the Adviser's fee) from exceeding 1-1/2% of the net
assets of the Fund.
SECTION FOUR
DURATION; TERMINATION
a. The term of this agreement shall begin on May 14, l993,
and this agreement shall continue from year to year thereafter,
subject to the provisions for termination and all of the other terms
and conditions hereof, if (1) such continuation shall be specifically
approved at least annually by vote of a majority of the outstanding
voting securities of the Fund; and (2) Adviser shall not have
notified the Fund, in writing, at least sixty days prior to the date
of the Annual Shareholders Meeting of any year, that it does not
desire such continuation.
b. This agreement may be terminated by the Fund on 60 days
notice in writing to Adviser, without the payment of any penalty,
provided such termination be authorized by resolution of the Board of
Directors of the Fund or by vote of a majority of its outstanding
voting securities.
SECTION FIVE
AMENDMENT OF AGREEMENT
This agreement may not be amended, transferred, assigned, sold or in
any manner hypothecated or pledged without the affirmative vote or
written consent of the holders of a majority of the outstanding
voting securities of the Fund; and this agreement shall automatically
and immediately terminate in the event of its assignment by Adviser.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be signed by their respective Officers thereunto duly authorized and
their respective corporate seals to be hereunto affixed, the day and
year first above written.
THE BERWYN FUND, INC. THE
KILLEN GROUP, INC.
by: Kevin M. Ryan by:
Robert E. Killen
Secretary-Treasurer
President
