BERWYN INCOME 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 the
undersigned at the Annual Meeting of Shareholders of
the Berwyn Income Fund, Inc., to be held at 11:00 A.M.
or immediately following the Annual Meeting of The
Berwyn Fund, Inc., on Friday, March 22, 1996 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 Items 1,
2, and 3.
1. Election of Directors:
For Withhold
Withhold
______All Nominees ______All Nominees ____Those Listed
Below
Nominees:
Robert E. Killen, Denis P. Conlon, Anthony N.
Carrelli, Edward A. Killen II and
William H. Vonier.
Instruction: To withhold authority to vote for
any individual nominee, please print his name
below:
2. Investment Advisory Agreement:
______Approve ______Disapprove
______Abstain
3. Ratification of Price Waterhouse as Independent
Accountants:
______For ______Against ______Abstain
Please sign and date this proxy and return it promptly
in the enclosed envelope.
_____________________________________
Dated____________________1996
_____________________________________
Dated____________________1996
Joint Tenant (if any)
Please check here if planning to attend the
annual meeting.
Please check here if you have comments and use
back of form.
YOUR VOTE IS IMPORTANT
BERWYN INCOME FUND, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 22, 1996
BERWYN, PENNSYLVANIA
NOTICE IS HEREBY GIVEN that the annual meeting of
shareholders of the Berwyn Income 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 22, 1996, at 11:00
A.M. or immediately following The Berwyn Fund,
Inc. Shareholder Meeting, 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 March 22, 1996 to March 8, 1997, or
until the next annual meeting of
shareholders;
3. To consider and ratify the
appointment of Price Waterhouse as
independent accountants for the fiscal
year ending December 31, 1996.
At such meeting, only holders of common stock of
record at the close of business on February 5,
1996 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
Kevin M. Ryan
Secretary
February 7, 1996
-1-
PROXY STATEMENT
SOLICITATION, REVOCATION AND VOTING OF PROXIES
The enclosed proxy is solicited by and on behalf of
the Board of Directors of Berwyn Income Fund, Inc.,
for use at the Annual Meeting of Shareholders, or
any adjournment thereof, to be held on March 22,
1996, at 11:00 A.M. or immediately following the
Annual Meeting of The Berwyn Fund, Inc., at the
executive offices of The Killen Group, Inc., 1199
Lancaster Avenue, Berwyn, Pennsylvania. The Fund's
address is 1189 Lancaster Avenue, Berwyn,
Pennsylvania 19312. This proxy statement and the
enclosed proxy are being sent to shareholders on or
about February 23, 1996. The close of business on
February 5, 1996 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, 9,994,017 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. Under Pennsylvania
law, abstentions and broker non-votes would likely
be included for purposes of determining whether a
quorum is present at the meeting, but would likely
be treated as votes not cast and, therefore, would
not be counted in determining whether matters to be
voted upon at the meeting have been approved.
The Investment Advisory Agreement, (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
("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 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 a nominee for
Director and the ratification of the appointment of
Price Waterhouse will require the affirmative vote
of a majority of shares in attendance 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 by 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 of the Fund may
request the return of proxies by personal
conversation or by telephone or telegraph.
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.
-2-
OWNERSHIP OF SHARES
Shareholders known by the Board of Directors to own
more than 5% of the outstanding shares of the Fund
on February 5, 1996 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) 3,884,009 38.90%
101 Montgomery Street
San Francisco, CA
National Financial Services Corp. (1) 996,619
9.97%
1 World Financial Center
200 Liberty Street
New York, NY
Donaldson Lufkin & Jenrette (1)553,239 5.33%
Pushing Division
1 Pershing Plaza
Jersey City, NJ
(1)The shareholders are registered broker dealers and hold the shar
es listed
for their benefit of their customers.
To the Fund's knowledge, no individual owned more
than 5% of the
outstanding shares of the Fund on February 5,
1996.
PROPOSAL 1. NOMINEES FOR ELECTION AS DIRECTORS
Five Directors are to be elected to serve until the
next Annual Meeting of Shareholders 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 his age,
principal occupation, business experience for at least
the past five years, and ownership of Fund shares.
This information is also provided for Kevin M. Ryan
who serves as Secretary-Treasurer of the Fund. Robert
E. Killen, Anthony N. Carrelli, Denis P. Conlon,
Edward A. Killen and William H. Vonier are currently
members of the Fund's Board of Directors and all are
nominees for election. The number and percentage of
the Fund's shares owned by the Directors and Officers
as a group is set forth at the end of the following
table:
-3-
Name(Age) Number of Shares
*Robert E. Killen
Beneficially Owned &
(54) Percent of Class as
of
February 5,
1996
59,918 + (1)
Principal Occupation and Other Business
Owned & Percent
Experience During the
Past Five Years
Director and Shareholder, Berwyn
Financial Services
Corp., a financial services company
(registered with the
the SEC as a broker-dealer 12/93 and a
member of the
NASD since 7/94), since October 1991.
President and
Director of Berwyn Income Fund, Inc.,
since December
1986. President and Director of The
Berwyn Fund, Inc.,
since February 1983. President,
Treasurer, Director and
Sole Shareholder of The Killen Group,
Inc. (an Investment
Advisory firm and the Investment
Adviser of the Fund)
since September 1982.
Name(Age) Number of Shares
*Anthony N. Carrelli
Beneficially Owned &
(46) Percent of Class as
of
February 5,
1996
403+
Principal Occupation and Other Business
Owned & Percent
Experience During the
Past Five Years
Director of Berwyn Income Fund, Inc.,
since December
1986. Director of The Berwyn Fund,
Inc., since January
1995. Vice President of The Killen
Group, Inc.
(Investment Advisory Firm and the
Investment Adviser to
the Fund) since August 1986.
Name(Age) Number of Shares
*Edward A. Killen II
Beneficially Owned &
(44) Percent of Class as
of
February 5,
1996
2,719 +
Principal Occupation and Other Business
Owned & Percent
Experience During the
Past Five Years
Director, Secretary and Shareholder,
Berwyn Financial
Services Corp., a financial services
company (registered
as a broker-dealer with the SEC since
12/93 and a member
of the NASD since 7/94), since October
1991. Director
of Berwyn Income Fund, Inc., since
January 1995.
Director of The Berwyn Fund, Inc., from
February 1983 to January 1995. Vice
President, Secretary and Director of
The Killen Group, Inc. (an Investment
Advisory Firm and
the Investment Adviser to the Fund)
since February 1983.
Name(Age) Number of Shares
Dennis P. Conlon
Beneficially Owned &
(47) Percent of Class as
of
February 5,
1996
997 +
Principal Occupation and Other Business
Owned & Percent
Experience During the
Past Five Years
Director of The Berwyn Fund, Inc., and
Berwyn Income
Fund, Inc., since June 1992. Vice
President, Corporate
Development Berwind Corporation
(Diversified
Manufacturing and Financial Company)
since 1990. Prior
to 1990, Vice President Corporate
Planning
Pneumo/ABEX Corp. (a division of IC
Industries) for
more than 5 years.
Name(Age) Number of Shares
William Vonier Beneficially Owned
&
(66) Percent of Class as
of
February 5,
1996
- -----
Principal Occupation and Other Business
Owned & Percent
Experience During the
Past Five Years
Director of The Berwyn Fund, Inc., and
Berwyn and
Berwyn Income Fund, Inc., since June
1992. Independent
Consultant Sales and Marketing since
1989.
-4-
Name(Age) Number of Shares
*Kevin M. Ryan Beneficially Owned
&
(48) Percent of Class as
of
February 5,
1996
31,889 +
Principal Occupation and Other Business
Owned & Percent
Experience During the
Past Five Years
President, Treasurer, Director and
Shareholder of
Berwyn Financial Services Corp., a
financial services
company, (registered as a broker-
dealer with the SEC
since 12/93 and a member of the NASD
since 7/94),
since October 1991. Secretary-
Treasurer of Berwyn
Income Fund, Inc., since 1986.
Director of Berwyn
Income Fund, Inc., from December 1986
to January
1995. Secretary, Treasurer and
Director of The Berwyn
Fund, Inc., since February 1983. Legal
Counsel
to The Killen Group, Inc. (an
Investment Advisory
Firm and the Investment Adviser to the
Fund)
since September 1985.
All Directors and Officers of the Fund as a group
owned 95,926 shares of the Fund, which constituted
approximately 1.0% of its outstanding shares as of
February 5, 1996.
+Indicates ownership of less than 1% of the
outstanding shares of the Fund.
Notes: (1) The shares listed for Robert E.
Killen include shares owned by
The Killen Group, Inc. and shares owned by
his wife.
Shares listed for Kevin M. Ryan include
shares owned by two
Partnerships of which he is a General
Partner.
* Robert E. Killen, Anthony N. Carrelli,
Edward A. Killen II and
Kevin M. Ryan are interested persons of the
Fund as defined in the 1940 Act. Messrs.
R. Killen, Carrelli, and E. Killen are the
"Interested Directors" of the Fund as
defined in the 1940 Act. Robert E. Killen
is an Officer, Director and sole shareholder
of the Adviser to the Fund. He is also a
Director of Berwyn Financial Services Corp.,
a registered broker-dealer, and owns 1/3 of
its outstanding shares. Anthony N. Carrelli
is a Vice President of the Adviser to the
Fund. Edward A. Killen II is an Officer and
Director of the Adviser to the Fund. He is
also an Officer, Director and the owner of
1/3 of the outstanding shares of Berwyn
Financial Services Corp. Kevin M. Ryan is
legal counsel to the Adviser and he is an
Officer, Director and Owner of 1/3 of
outstanding shares of Berwyn Financial
Services Corp. In addition, Robert E.
Killen and Edward A. Killen II are brothers
and Kevin M. Ryan is brother-in-law to both.
Berwyn Financial Services Corp. serves as
the selling agent for the Fund in certain
jurisdictions.
-5-
The Board of Directors sets broad policies for the
Fund and elects the Officers. The Officers of the
Fund are Robert E. Killen, President, and Kevin M.
Ryan, Secretary-Treasurer. The Officers manage the
Fund's daily operations and are directly responsible
to the Directors.
The Board held three meetings in fiscal year 1995 and
all Directors were present at each meeting. The Board
has an Audit Committee composed of Messrs. Conlon and
Vonier, each of whom are not "interested persons" of
the Fund, as that term is defined in the 1940 Act
("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 Committee met once in 1995.
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 1995,
Messrs. Conlon and Vonier were paid fees of $1,200 and
$1,200, respectively. Messrs. Conlon and Vonier also
serve as Independent Directors of The Berwyn Fund,
Inc. (another registered investment company managed by
The Killen Group, Inc.). In 1995, Messrs. Conlon and
Vonier received $1,200 and $1,200, respectively, in
Directors' fees from The Berwyn Fund, Inc. The total
Directors' fees paid by both Funds to Messrs. Conlon
and Vonier were $2,400 and $2,400, respectively for
the 1995 fiscal year.
Officers of the Fund are not paid compensation by the
Fund for their work as Officers and no fees are paid
to the Interested Directors for the performance of
their duties.
PROPOSAL 2. INVESTMENT ADVISORY AGREEMENT
Investment Adviser
The Killen Group, Inc. (The Adviser) currently serves
as the Investment Adviser to the Fund. The Killen
Group is a Pennsylvania corporation formed in
September 1982 and its offices are located at 1189
Lancaster Avenue, Berwyn, Pennsylvania.
The Officers and Directors of the Adviser are Robert
E. Killen, President, Treasurer and Director, Edward
A. Killen II, Vice President, Secretary and Director,
Tara J. Killen, Director, and William A. Siegenthaler,
Director.
Robert E. Killen's address is 1199 Lancaster Avenue,
Berwyn, Pennsylvania. He has worked as an Investment
Adviser since 1969. In that year, he cofounded 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
partner.
In December 1983, the partnership of Compu Val
Management Associates was dissolved.
-6-
Edward A. Killen II's address is 1189 Lancaster
Avenue, Berwyn, Pennsylvania. He was Portfolio
Manager for Compu Val Management Associates from 1976
until September 1983. At that time he assumed his
present position with the Adviser.
Tara J. Killen's address is 1189 Lancaster Avenue,
Berwyn, Pennsylvania. She has been employed by the
Adviser since June 1994 as an assistant portfolio
manager and supervisor for mutual fund communications.
William A. Siegenthaler's address is 1375 Cinnamon
Drive, Fort Washington, Pennsylvania. He is employed
as a manager of the Capital Markets Department of
Electronic Data Systems Corporation, Wayne, PA since
March 1995.
Robert E. Killen is Chairman of the Board and
President of the Fund and currently a nominee for re-
election as a Director. Edward A. Killen II and
Anthony N. Carrelli, Vice President of the Adviser,
are currently Directors of the Fund and are nominees
for election as Directors at the Annual Meeting.
Advisory Contract
The Adviser serves as investment adviser pursuant to a
written agreement dated May 14, 1993. Under the terms
of the agreement, the Adviser provides the Fund with
advice and recommendations with respect to
investments, investment policies, the purchase and
sale of securities 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, the Fund has
agreed to pay the Adviser monthly compensation at the
annual rate of 1/2 of 1% of the average daily net
assets of the Fund. In 1995, the Adviser received
advisory fees totalling $477,283. The agreement
between the Adviser and the Fund provides that the
Adviser's fee will be reduced in any fiscal year by
any amount necessary to prevent the 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% (1 1/2% when net assets are
over $100 million) of the average daily net assets of
the Fund. This expense limitation was not used in
1995.
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
-7-
continue in effect from year to 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 10, 1996.
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 1995
and from its inception, the nature and quality of
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 affiliated brokers and that the
Adviser allocated transactions with brokers who sold
shares of the Fund and provided research to the Fund.
Prior to the Board meeting held on January 10, 1996,
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 since inception as well as the annual
average total return for 1 year, 5 years and the life
of the Fund. The memorandum listed the total amount
of fees paid to the Adviser for the year, 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.
After a discussion regarding the Advisory Agreement,
the Board unanimously determined that it was in the
best interest of the Fund's shareholders to renew the
Agreement. The Board determined that the performance
of the Fund in 1995 was satisfactory and that the
performance of the Fund and level and quality of
services provided by the Adviser since the Fund's
inception have been good. 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.
The terms of the Advisory Agreement require that the
renewal of the agreement be submitted to the
shareholders at the Annual Meeting for their approval.
This Advisory Agreement of the Fund was last submitted
for shareholder approval at the Annual Meeting held on
March 24, 1995. At that time, the agreement was
approved. No changes have been made in the agreement
since March 24, 1995.
A copy of the agreement is attached as Appendix A.
The Board of Directors recommends approval by
shareholders of the Advisory Agreement.
-8-
Affiliated Brokers
The Board has adopted procedures under Rule 17e-1 of the
1940 Act that permit portfolio transactions through
affiliated brokers. In 1995, the affiliated broker used
by the Fund was Berwyn Financial Services Corp. ("BFS").
BFS is affiliated with the Fund by reason of the fact
that Officers and Directors of the Fund and Adviser are
Officers, Directors and Shareholders of BFS. In
addition, BFS serves as the selling agent for the Fund
in various jurisdictions pursuant to a written
agreement.
In 1995, the Fund paid a total of $199,302 in
commissions to BFS. This figure represents 87% of the
total commissions paid by the Fund.
PROPOSAL 3. RATIFICATION OF SELECTION OF INDEPENDENT
ACCOUNTANTS
The Board of Directors of the Fund is requesting
ratification of its selection of Price Waterhouse, LLP
as Independent Accountants of the Fund for the fiscal
year ending December 31, 1996. Price Waterhouse has
served as Independent Accountants for the Fund since it
began operations.
No representative of Price Waterhouse is expected at the
Annual Meeting.
The Board of Directors recommends the ratification by
shareholders of such selection.
Shareholder Proposals
Proposals of Shareholders intended to be presented at
the 1996 Annual Meeting must be received by the Fund by
February 4, 1997 for inclusion in the Fund's Proxy
Statement and Proxy relating to that meeting. Upon
receipt of any 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
Kevin M. Ryan
Secretary
February 7, 1996
-9-
Insert Appendix A existing signed copy
APPENDIX A
CONTRACT FOR
INVESTMENT ADVISORY SERVICES
Agreement made May 14, 1993 between The Berwyn Income
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.
1. The Fund shall register with the Securities and
Exchange Commission as a 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
Advisors 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 recommendations 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, 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 1/2 of l.0% of the average daily 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
for Officers and employees of the Fund. 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% if
net assets of the Fund. When the total net assets
of the Fund exceed $100 million, 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 1 1/2% of the net
assets of the Fund.
SECTION FOUR
DURATION; TERMINATION
a. This agreement shall begin on May 14, l993.
The agreement shall continue in effect 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
thereafter, 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 INCOME FUND, INC. THE KILLEN GROUP,
INC.
by: Kevin M. Ryan
by: Robert E. Killen
Secretary-Treasurer
President
OPINION OF COUNSEL
TO WHOM IT MAY CONCERN:
I am counsel to Berwyn Income Fund, Inc. I am
writing this letter to state my opinion as counsel
that the shares of the Fund sold in calendar year
1995 were legally issued, fully paid and non-
assessable.
Berwyn Income Fund, Inc., is a corporation
incorporated under the laws of the Common-wealth of
Pennsylvania on December 26, 1986. Under its
Articles of Incorporation, the Fund has the power to
issue 20,000,000 shares of common stock. On
February 7,1987, a shareholder resolution was
approved that authorized the Board of Directors to
issue shares of common stock in such amounts and
proportions as from time to time it deemed
appropriate and the Board was authorized to set the
price at which shares would be sold.
On June 10, 1987, the Board approved a resolution
authorizing the sale of 2,000,000 shares of common
stock to the public. The resolution directed that
prior to sale, the shares be registered with the
U.S. Securities and Exchange Commission and various
states and that the shares be sold at their net
asset value and that they be fully paid and non-
assessable when issued. The share registration with
the Securities and Exchange Commission became
effective September 3, 1987.
On December 11, 1992, the Board authorized the Fund
to register an indefinite number of shares of common
stock for sale with the Securities and Exchange
Commission pursuant to rule 24f of the Investment
Company Act of 1940.
Registration under Rule 24f became effective on
March 24, 1993. Under section 1524 of the
Pennsylvania Business Corporation Law of 1988,
shares of stock sold by Pennsylvania corporations
after December 1988, will be deemed fully paid and
non-assessable unless there are contrary provisions
in Articles of Incorporation or By Laws. There are
no provisions in the Fund's Articles or By Laws that
allow the Fund to issue stock that is not fully paid
or to issue assessable stock.
Based upon the foregoing facts, it is my opinion
that the shares issued in 1995 were legally issued,
fully paid and non-assessable.
Kevin M. Ryan
Kevin M. Ryan
Counsel to the
Fund
