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., which is scheduled
for 10:00 A.M. on Monday, March 31, 1997 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____________________1997
_____________________________________
Dated____________________1997 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 31, 1997
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 Monday,
March 31, 1997, at 11:00 A.M. or immediately following The
Berwyn Fund, Inc. Shareholder Meeting, which is scheduled for
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
March 31, 1997 to March 27, 1998, 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,
1997.
At such meeting, only holders of common stock of record at the
close of business on February 11, 1997 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 12, 1997
-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. (the "Fund"), for use
at the Annual Meeting of Shareholders, or any adjournment
thereof, to be held on March 31, 1997, at 11:00 A.M. or
immediately following the Annual Meeting of The Berwyn Fund,
Inc.,which is scheduled for 10:00 A.M., at the executive
offices of The Killen Group, Inc. (the "Adviser"), 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 on or about March 1, 1997. The close of business
on February 11, 1997 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, 10,940,827
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 nonvotes 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.
The proposed Investment Advisory Agreement between the Fund and
the Adviser, (the "Advisory Agreement"), requires approval by a
vote of
amajority 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 as independent accountants of the Fund 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 11, 1997 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) 1,321,239 12%
101 Montgomery Street
San Francisco, CA
National Financial (1) 1,040,070 10%
Services Corp.
1 World Financial Center
200 Liberty Street
New York, NY
(1) Indicated owner of record; the record owner is a
registered
broker dealer and holds the shares listed 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
11, 1997.
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-
<TABLE>
<S> <C> <C>
Number of Shares
Principal Occupation Beneficially
and Other Business Owned & Percent
Experience During the of Class as of
Name(Age) Past Five Years February 11, 1997
*Robert E. Killen Director and Shareholder, Berwyn Financial Services 67,956
(55) Corp., a financial services company (registered with (1)
the SEC as a broker-dealer 12/93 and a member of the +
NASD since 7/94), 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 The Killen Group, Inc.
(an Investment Advisory firm and the Investment Adviser
of the Fund) since April 1996. President, Treasurer,
Director and Sole Shareholder of The Killen Group, Inc.
from September 1982 to March 1996.
*Anthony N. Carrelli Director of Berwyn Income Fund, Inc., since December 446
(47) 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.
*Edward A. Killen II Director, Secretary and Shareholder, Berwyn Financial 3,009
(46) 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.
Denis P. Conlon Director of The Berwyn Fund, Inc., and Berwyn Income 1,103
(48) Fund, Inc., since June 1992. President & CEO of CRC +
Industries (a worldwide manufacturer of chemical
specialties for industrial and automotive markets)
since September 1996. Vice President, Corporate
Development, Berwind Corporation (diversified
manufacturing and financial company) from 1990
to September 1996.
-4-
William Vonier Director of The Berwyn Fund, Inc., and Berwyn and
(67) Berwyn Income Fund, Inc., since June 1992.
IndependentConsultant Sales and Marketing since 1989.
*Kevin M. Ryan President, Treasurer, Director and Shareholder of 33,506
(49) Berwyn Financial Services Corp., a financial (2)
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.
</TABLE>
All Directors and Officers of the Fund as a group owned 106,020
shares of the Fund, which constituted approximately 1.0% of its
outstanding shares as of February 11, 1997.
+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.
(2) 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 1/2 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 Advisor 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 Advisor 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. 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.
-5-
The Board held four meetings in fiscal year 1996 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 an "interested person" 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 Audit Committee met
once in 1996.
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 1996 fiscal year, Messrs. Conlon and Vonier were paid
fees of $1,600 and $1,600, respectively from the Funds.
Messrs. Conlon and Vonier also serve as
Independent Directors of The Berwyn Fund, Inc. (another
registered investment company managed by the Adviser). In the
1996 fiscal year, Messrs. Conlon and Vonier received $1,600
and $1,600, respectively, in Directors' fees from The Berwyn
Fund, Inc. The total Directors' fees paid by both Funds to
Messrs. Conlon and Vonier were $3,200 and $3,200, respectively
for the 1996 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 Adviser 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, Chairman, CEO and Treasurer, William A. Siegenthaler,
President, Chief Operating Officer and Director , Edward A.
Killen, II, Executive Vice President, Secretary and Director,
and Tara J. Killen, Director. The address of each Officer and
Directoe is 1199 Lancaster Avenue, Berwyn, Pennsylvania.
Robert E. Killen 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-
William A. Siegenthaler has been the President and Chief
Operating Officer of The Killen Group since April 1996. Prior
to that he was manager of the Capital Markets Department of
Electronics Data Systems Corporation, Wayne, Pennsylvania from
March 1995 to March 1996.
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.
Tara J. Killen has been employed by the Adviser since June
1994 as an assistant portfolio manager and supervisor for
mutual fund communications.
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 Agreement
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, under the Advisory
Agreement, 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 the 1996 fiscal year, the
Adviser received advisory fees totalling $638,212. 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
1996.
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
-7-
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 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 21, 1997.
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 1996 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 to brokers who sold shares of the Fund
and provided research to the Fund and the Advisor. Prior to
the Board meeting held on January 11, 1997, 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 1996 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
Fund's Annual Meeting held on March 22, 1996. At that time,
the agreement was approved. No changes have been made in the
agreement since March 22, 1996.
A copy of the advisory agreement is attached as Appendix A.
The Board of Directors recommends approval by shareholders of
the Advisory Agreement.
-8-
Affiliated Brokers
The Fund places portfolio transactions through affiliated
brokers. In the 1996 fiscal year, 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 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 a written agreement.
In 1996, the Fund paid a total of $126,520 in commissions to
BFS. This figure represents 88% 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, 1997. 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 1998
Annual Meeting must be received by the Fund by November 1,
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
Secretary
February 12, 1997
-9-
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
