TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into this 15th day of July, 2003, by
and between Conestoga Funds (the "Trust"), a Delaware statutory trust having its
principal place of business at Five Tower Bridge, 000 Xxxx Xxxxxx Xxxxx, Xxxxx
000, Xxxx Xxxxxxxxxxxx, XX 00000, Mutual Shareholder Services, LLC, a Delaware
Limited Liability Company ("MSS") and Conestoga Capital Advisors, LLC,
Pennsylvania Limited Liability Company (the "Adviser") (collectively, the
"Parties").
RECITALS:
A. The Trust is an open-end management investment company registered with
the United States Securities and Exchange Commission under the Investment
Company Act of 1940, as amended (the "1940 Act") and authorized by its Trust
Instrument and Bylaws to issue separate series of shares representing interests
in separate investment portfolios which are identified on Exhibit "B" attached
hereto and which Exhibit "B" may be amended from time to time by mutual
agreement of the Parties; and
B. MSS is a company experienced in providing transfer agency services to
mutual funds and possesses facilities sufficient to provide such services; and
C. The Trust desires to appoint MSS as its transfer agent and dividend
disbursing and redemption agent, and MSS desires to accept such appointment.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereby agree as follows:
1. DUTIES OF MSS.
1.01 Subject to the terms and conditions set forth in this Agreement, the
Trust hereby employs and appoints MSS to act, and MSS agrees to act, as transfer
agent for the Trust's authorized and issued shares of beneficial interest of
each class of each portfolio of the Trust (the "Shares"), and as dividend
disbursing and redemption agent for the Trust.
1.02 MSS agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Trust and MSS, MSS shall:
(i) Receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation therefore
to the
Custodian of the Trust authorized by the Board of Trustees of the
Trust (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation therefore to
the Custodian;
(iv) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions
declared by the Trust;
(vii) Maintain records of account for and advise the Trust and its
Shareholders as to the foregoing;
(vii) Provide necessary and reasonable access to properly
authorized federal examiners so that they can obtain all necessary
information and records relating to the AML Program and to inspect
MSS's implementation and operation of the AML Program; and
(viii) Record the issuance of shares of the Trust and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number of
shares of the Trust which are authorized, based upon data provided
to it by the Trust, and issued and outstanding. MSS shall also
provide the Trust on a regular basis with the total number of shares
which are authorized, issued and outstanding and shall have no
obligation, when recording the issuance of shares, to monitor the
issuance of such shares or to take cognizance of any laws relating
to the issue or sale of such shares, which functions shall be the
sole responsibility of the Trust.
(b) In addition, MSS shall perform all of the customary services of
a transfer agent, dividend disbursing and redemption agent, including but
not limited to: maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing proxies, receiving and tabulating
proxies, mailing Shareholder reports and prospectuses to current
Shareholders, withholding taxes for U.S. resident and non-resident alien
accounts, preparing and filing U.S. Treasury Department Forms 1099 and
other appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders, preparing and
mailing confirmation forms and statements of account to Shareholders for
all purchases and redemptions of Shares and other confirmable
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transactions in Shareholder accounts, preparing and mailing activity
statements for Shareholders, and providing Shareholder account information
and a system and reports which will enable the Trust to monitor the total
number of Shares sold in each State.
Procedures applicable to certain of these services may be established from
time to time by agreement between the Trust and MSS.
2. FEES AND EXPENSES
2.01 In consideration of the services to be performed by MSS pursuant to
this Agreement, the Adviser agrees to pay MSS, on behalf of the Trust, the fees
set forth in the fee schedule attached hereto as Exhibit "A".
2.02 In addition to the fee paid under Section 2.01 above, the Adviser
agrees to reimburse MSS for out-of-pocket expenses or advances incurred by MSS
in connection with the performance of its obligations under this Agreement. In
addition, any other expenses incurred by MSS at the request of the Trust and
with the consent of the Adviser will be reimbursed by the Adviser.
2.03 The Adviser agrees to pay all fees and reimbursable expenses within
five days following the receipt of the respective billing notice. Postage for
mailing of dividends, proxies, Trust reports and other mailings to all
shareholder accounts shall be advanced to MSS by the Adviser at least seven days
prior to the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF MSS
MSS represents and warrants to the Trust that:
3.01 It is a Limited Liability Company duly organized and existing and in
good standing under the laws of the State of Delaware.
3.02 It is duly qualified to carry on its business in the State of Ohio.
3.03 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3.06 MSS is duly registered as a transfer agent under the Securities Act
of 1934 and shall continue to be registered throughout the remainder of this
Agreement.
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4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Trust represents and warrants to MSS that:
4.01 It is a statutory Trust duly organized and existing and in good
standing under the laws of Delaware.
4.02 It is empowered under applicable laws and by its Trust Instrument to
enter into and perform this Agreement.
4.03 All corporate proceedings required by said Trust Instrument have been
taken to authorize it to enter into and perform this Agreement.
4.04 It is an open-end and diversified management investment company
registered under the 0000 Xxx.
4.05 A registration statement under the Securities Act of 1933 is
currently or will become effective and will remain effective, and appropriate
state securities law filings as required, have been or will be made and will
continue to be made, with respect to all Shares of the Trust being offered for
sale.
5. INDEMNIFICATION
5.01 MSS shall not be responsible for, and the Trust shall indemnify and
hold MSS harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to:
(a) All actions of MSS or its agents or subcontractors required to
be taken pursuant to this Agreement, provided that such actions are taken
in good faith and without negligence or willful misconduct.
(b) The Trust's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Trust's lack of good faith, gross or
ordinary negligence or willful misconduct or which arise out of the breach
of any representation or warranty of the Trust hereunder.
(c) The reliance on or use by MSS or its agents or subcontractors of
information, records and documents which (i) are received by MSS or its
agents or subcontractors and furnished to it by or on behalf of the Trust,
and (ii) have been prepared and/or maintained by the Trust or any other
person or firm on behalf of the Trust.
(d) The reliance on, or the carrying out by MSS or its agents or
subcontractors of, any instructions or requests of the Trust.
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(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or
in violation of any stop order or other determination or ruling by any
federal agency or any state with respect to the offer or sale of such
Shares in such state.
5.02 MSS shall indemnify and hold the Trust harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any action or failure or omission to
act by MSS as a result of MSS's lack of good faith, negligence or willful
misconduct.
5.03 At any time MSS may apply to any officer of the Trust for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by MSS under this
Agreement, and MSS and its agents or subcontractors shall not be liable and
shall be indemnified by the Trust for any action taken or omitted by it in
reliance upon such instructions or upon the written opinion of such counsel.
MSS, its agents and subcontractors shall be protected and indemnified in acting
upon any paper or document furnished by or on behalf of the Trust, reasonably
believed to be genuine and to have been signed by the proper person or persons,
or upon any instruction, information, data, records or documents provided MSS or
its agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Trust, and shall not be held to have
notice of any change of authority of any person, until receipt of written notice
thereof from the Trust. MSS, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officers of
the Trust, and the proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes so long as appropriate actions have been taken to mitigate said
damages including, but not limited to, adoting and iimplementing a reasonable
disaster recovery program.
5.05 Upon the assertion of a claim for which either party may be required
to indemnify the other, the party seeking indemnification shall promptly notify
the other party of such assertion, and shall keep the other party advised with
respect to all developments concerning such claim. The party who may be required
to indemnify shall have the option to participate with the party seeking
indemnification in the defense of such claim. The party seeking indemnification
shall in no case confess any claim or make any compromise in any case in which
the other party may be required to indemnify it except with the other party's
prior written consent.
6. COVENANTS OF THE FUND AND MSS
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6.01 The Trust shall promptly furnish to MSS a certified copy of the
resolution of the Board of Trustees of the Trust authorizing the appointment of
MSS and the execution and delivery of this Agreement.
6.02 MSS hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Trust for safekeeping of stock certificates, check
forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms and
devices. In addition, MSS shall maintain adequate and reliable computer and
other equipment necessary or appropriate to carry out its obligations under this
Agreement. Upon the Trust's request, MSS shall provide supplemental information
concerning the aspects of its disaster recovery and business continuity plan
that are relevant to the services provided hereunder. MSS represents and
warrants that the various procedures and systems which MSS has implemented with
regard to safeguarding from loss or damage attributable to fire, theft, or any
other cause the records and other data of the Trust, and MSS' records, data,
equipment facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as are required for the secure performance of its obligations
hereunder. 6.03 MSS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the 1940 Act, as amended, and the Rules thereunder,
MSS agrees that all such records prepared or maintained by MSS relating to the
services to be performed by MSS hereunder are the property of the Trust and will
be preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Trust on and in accordance with
its request.
6.04 MSS and the Trust agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person, except
as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Trust, MSS will endeavor to notify the Trust and to
secure instructions from an authorized officer of the Trust as to such
inspection. MSS reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such person, and shall
promptly notify the Trust of any unusual request to inspect or copy the
shareholder records of the Trust or the receipt of any other unusual request to
inspect, copy or produce the records of the Trust.
6.06 MSS shall provide the Trust, at such times as the Trust may
reasonably require, copies of reports rendered by independent public accountants
on the internal controls and procedures of MSS relating to the services provided
by MSS under this Agreement.
6.07 MSS agrees that all nonpublic personal financial information relating
to consumers or customers of the Trust provided by, or at the direction of the
Trust to MSS, or collected or retained by MSS in the course of performing its
duties as transfer agent shall be
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considered confidential information. MSS shall not give, sell or in any way
transfer such confidential information to any person or entity, other than
affiliates of MSS except at the direction of the Trust or as required or
permitted by law. MSS represents, warrants and agrees that it has in place and
will maintain physical, electronic and procedural safeguards reasonably designed
to protect the security, confidentiality and integrity of, and to prevent
unauthorized access to or use of records and information relating to consumers
or customers of the Trust. The Trust represents to MSS that it has adopted a
Statement of its privacy policies and practices as required by Securities and
Exchange Commission Regulation S-P and agrees to provide MSS with a copy of that
statement annually.
7. TERM OF AGREEMENT
7.01 This Agreement shall become effective as of the date hereof and shall
remain in force for a period of three years; provided, however, that each party
to this Agreement has the option to terminate the Agreement without penalty,
upon 60 days prior written notice.
7.02 Should the Trust exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Trust. Additionally, MSS reserves the right to charge for any other
reasonable expenses associated with such termination.
8. Anti-Money Laundering.
The Trust acknowledges that it is a financial institution subject to
the law entitled United and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism ("U.S.A. Patriot") Act of 2001 and
the Bank Secrecy Act (collectively, the "AML Acts") and shall comply with the
AML Acts and applicable regulations adopted thereunder (collectively, the
"Applicable AML Laws") in all relevant respects, subject to the delegation of
certain responsibilities to MSS, as provided below. In compliance with the
Applicable AML Laws, the Trusts has adopted an anti-money laundering program
(the "Trust AML Program") which permits the Trust to delegate by contract the
implementation and operation of the program to those primary service providers
on which the Trust will have to rely to meet its obligations under the
Applicable AML Laws.
The Trust hereby delegates to MSS the performance, on behalf of the
Trust, of the AML Services set forth in Schedule A as concerns the shareholder
accounts maintained by MSS pursuant to this Agreement. MSS agrees to the
foregoing delegation and agrees to perform the delegated services in accordance
with the Trust AML Program. In connection therewith, MSS agrees to maintain
policies and procedures, and related internal controls, that are consistent with
the Trust AML Program and the requirement that the Trust employ procedures
reasonably designed to achieve compliance with the Applicable AML Laws,
including the requirement to have policies and procedures that can be reasonably
expected to detect and cause the reporting of transactions under Section 5318 of
the Bank Secrecy Act.
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The Trust agrees and acknowledges that, notwithstanding the
delegation provided for in the foregoing paragraph, the Trust maintains full
responsibility for ensuring that the Trust AML Program is, and shall continue to
be, reasonably designed to ensure compliance with the Applicable AML Laws, in
light of the particular business of the Trust, taking into account factors such
as its size, location, activities and risks or vulnerabilities to money
laundering.
In connection with the foregoing delegation, the Trust also
acknowledges that the performance of the anti-money laundering services
enumerated in Schedule A involves the exercise of discretion, which in certain
circumstances may result in consequences to the Trust and its shareholders (such
as in the case of the reporting of suspicious activities and the freezing of
shareholder accounts). In this regard, (i) under circumstances in which the
Trust AML Program authorizes the taking of certain actions, MSS is granted the
discretion to take any such action as may be authorized, and consultation with
the Trust shall not be required in connection therewith unless expressly
required by the Trust AML Program, and (ii) the Trust instructs MSS that it may
avail the Trust of any safe harbor from civil liability that may be available
under Applicable AML Laws for making a disclosure or filing a report thereunder.
The Trust represents and warrants that (a) the Trust has adopted the
Trust AML Program, and has appointed the Trust's AML Compliance Officer, who is
an officer of the Trust; (b) the Trust AML Program and the designation of the
AML Compliance Officer have been, or will be at the next scheduled meeting of
the Board, approved by the Board; (c) the delegation of certain services
thereunder to MSS, as provided above, has been, or will be at the next scheduled
meeting of the Board, approved by the Board; and (d) the Trust will submit any
material amendments to the Trust AML Program to MSS for MSS' review. Any
amendment that would have a material impact upon the AML Services to be rendered
by MSS or the responsibilities of MSS shall be subject to approval by MSS prior
to adoption. The Trust's AML Compliance Officer need not be an officer of the
Trust if not required by applicable laws and regulations.
MSS represents and warrants to the Trust that it has adopted and
will maintain a written program concerning the anti-money laundering services it
provides to its various clients, and that its policies and procedures are
reasonably adequate for it to provide the AML Services and comply with its
obligations under this Amendment.
MSS shall grant reasonable access to the Trust, the AML Compliance
Officer, and regulators having jurisdiction over the Trust, to the books and
records maintained by MSS as the same relates to the AML Services performed
hereunder on behalf of the Trust. Records may be edited or redacted to maintain
confidentiality of materials related to other clients of MSS. MSS shall make its
relevant personnel available to meet with the Board concerning the AML Services
at least annually or at such other internals as may be reasonably necessary or
appropriate.
8. MISCELLANEOUS
8.01 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other party. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns.
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8.02 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Trustees of the Trust.
8.03 The provisions of this Agreement shall be construed and interpreted
in accordance with the laws of the State of New York as at the time in effect
and the applicable provisions of the 1940 Act. To the extent that the applicable
law of the State of New York, or any of the provisions here in, conflict with
the applicable provisions of the 1940 Act, the latter shall control.
8.04 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
8.05 All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Trust:
Conestoga Funds
Five Tower Bridge
000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxxxxxxx, XX 00000
Attention: W. Xxxxxxxxxxx Xxxxxxx
Chairman and CEO
with a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: S. Xxxxxxx Xxxxx, Esq.
To MSS:
Mutual Shareholder Services
0000 Xxxxxxxxxxx Xxxx, Xxxxx X
Xxxxxxxxxxx, XX 00000
8.06 A copy of the Trust's Certificate of Trust is on file with the
Secretary of the State of Delaware, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as Trustees and
not individually and that the obligations of this instrument are not binding
upon any of the Trustees or Shareholders individually but are binding only upon
the assets and property of the Trust.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Conestoga Funds: Mutual Shareholder Services, LLC:
By: /s/ X. X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx
---------------------------- -----------------------------------
Its: CEO Its: President
--------------------------- ---------------------------------
Conestoga Capital Advisors, LLC:
By: /s/ Xx X. Xxxxxxxxxx Xx.
-------------------------------
Its:
-------------------------------
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SCHEDULE A
Services to be Performed Under Section 8 of the Agreement
o Verify shareholder identity upon opening new accounts.
o Monitor, identify and report shareholder transactions and identify and
report suspicious activities that are required to be so identified and
reported, and provide other required reports to the Securities and
Exchange Commission, the U.S. Treasury Department, the Internal Revenue
Service or each agency's designated agent, in each case consistent with
the Trust's AML Program.
o Place holds on transactions in shareholder accounts or freeze assets in
shareholder accounts, as provided in the Trust's AML Program.
o Create documentation to provide a basis for law enforcement authorities to
trace illicit funds.
o Maintain all records or other documentation related to shareholder
accounts and transactions therein that are required to be prepared and
maintained pursuant to the Trust's AML Program, and make the same
available for inspection by (i) the Trust's AML Compliance Officer, (ii)
any auditor of the Trust's AML Program or related procedures, policies or
controls that has been designated by the Trust in writing, or (iii)
regulatory or law enforcement authorities, and otherwise make said records
or other documents available at the direction of the Trust's AML
Compliance Officer.
o Arrange for periodic reviews, at least annually, to be performed by
internal auditors or other auditors chosen by InCap concerning the InCap
operations related to the AML Services.
o Perform such other related services as are required by the AML Program.
o Provide a report to the Trust's AML Compliance Officer to the following
effect pertaining to the AML Services rendered by InCap hereunder during
such quarterly period:
o performed good order review for all new and reregistered
accounts;
o performed acceptance review for all monetary instruments
received;
o administered signature guarantee policy in accordance with
prospectus requirements;
o administered escrow hold policy in accordance with prospectus
requirements;
o verified customer address changes;
o verified customer identification for all new accounts and all
name changes on existing accounts;
o monitored all purchase transactions made with cash equivalents
totaling in excess of $10,000, resulting in the filing of Form
8300 reports during the period. The Trust does not accept cash
or currency;
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o monitored all accounts for suspicious activity resulting in
the filing of Form SAR reports during the period;
o reviewed shareholder names against lists of suspected
terrorist and terrorist organizations supplied by various
governmental organizations, such as the Office of Foreign
Asset Control resulting in the freezing and reporting of
accounts during the period;
o created the documentation necessary to provide a basis for law
enforcement authorities to trace illicit funds;
o maintained all records and other documentation related to
shareholder accounts and transactions required to be prepared
and maintained pursuant to the Trust's anti-money laundering
program for all MSS transfer agent services.
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EXHIBIT A
Current Mutual Shareholder Services billing system:
Accounting Fees *
If average value of fund
is between the following Yearly Fee Monthly Fee
- 25,000,000 21,000 1,750
25,000,000 50,000,000 30,500 2,542
50,000,000 75,000,000 36,250 3,021
75,000,000 100,000,000 42,000 3,500
100,000,000 125,000,000 47,750 3,979
125,000,000 150,000,000 53,500 4,458
150,000,000 - 59,250 4,938
Shareholder Servicing Fees *
11.50 annual fee per sharholder with a
min of $775.00 charge per month
Blue Sky Servicing Fees
100.00 per state per filing
Calculated monthly charges for the Fund
Value Approx.
Monthy Fee
Approximate Fund Size 2,000,000 1,750
No of Shareholders 45 775
Blue Sky States - -
-----
2,525
Less discount 60%* -1,515
New Fund Discount** -150
-----
Discounted fee 860
Annual Fee 10,320
*Discount calculated as follows:
Discount Net assets of Fund
65% - 1,500,000
60% 1,500,000 2,000,000
55% 2,000,000 2,500,000
50% 2,500,000 3,000,000
40% 3,000,000 4,000,000
35% 4,000,000 5,000,000
30% 5,000,000 6,000,000
25% 6,000,000 7,000,000
20% 7,000,000 8,000,000
15% 8,000,000 9,000,000
10% 9,000,000 10,000,000
0% 10,000,000 -
** Good for first 12 months of contract
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EXHIBIT B
Conestoga Small Cap Fund
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