PVCT Provectus Biopharmaceuticals Inc (QB)

_____________________

*The SMid Cap Fund commenced operations on January 21, 2014 and did not have any securities outstanding as of December 31, 2013.

**The Conestoga Funds “family of funds” consists of the Small Cap Fund, the SMid Cap Fund, and the LargeCap Fund .  

Based on all of the foregoing, the Board recommends that Shareholders vote FOR Proposal 1.

PROPOSAL 2

TO APPROVE THE INVESTMENT ADVISORY AGREEMENT ATTACHED HERETO AS APPENDIX A BETWEEN CCA AND THE TRUST, ON BEHALF OF THE SMID CAP FUND

PROPOSAL 3

TO APPROVE THE INVESTMENT ADVISORY AGREEMENT ATTACHED HERETO AS APPENDIX B BETWEEN CCA AND THE TRUST, ON BEHALF OF THE SMALL CAP FUND

The Board recommends that Shareholders vote FOR the Advisory Agreement between CCA and the Trust, on behalf of the SMid Cap and Small Cap Funds.  

At the Special Meeting, Shareholders will be asked to approve the Advisory Agreements between CCA and the Trust, on behalf of the Small Cap Fund and SMid Cap Fund, respectively, as described in Proposals 2 and 3 above.  The Advisory Agreement for the Small Cap Fund is substantially the same as the Advisory Agreement for the SMid Cap Fund, but differs from the Earlier Agreement for the Small Cap Fund in that CCA will not be providing additional non-advisory services to the Fund in exchange for a unitary fee.  The Advisory Agreement for the SMid Cap Fund contains substantially similar terms and conditions as the existing Earlier Agreement.  The forms of the Advisory Agreements are attached hereto as Appendix A and Appendix B.  The Board recommends approval of the Advisory Agreement to replace the Earlier Agreement, which, pursuant to the 1940 Act, will automatically terminate upon its assignment as part of the consummation of the Transaction.

If Shareholders of the Small Cap Fund do not approve Proposal 3 and Proposal 4 (which is discussed below), the Small Cap Fund will not enter into the Advisory Agreement.  The Trust’s Board may re-solicit proxies, and may consider alternatives to the Transaction as it deems appropriate and in the best interests of the Funds, including the possible liquidation of the Funds.

CCA and the Earlier Agreement

CCA currently provides day-to-day investment management services to the Small Cap and SMid Cap Funds pursuant to the Earlier Agreement.  CCA is registered as an investment adviser with the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940 (the "Advisers Act").  As of December 31, 2013, CCA had approximately $1.7 billion of assets under management.  CCA’s principal place of business is located at 259 N. Radnor-Chester Road, Radnor Court, Suite 120, Radnor, PA 19087, Telephone 800-494-2755, Facsimile (610) 225-0533.

Under the Earlier Agreement, CCA is entitled to receive an annual fee rate of 1.20% of the average daily net assets of the Small Cap Fund and 0.85% of the average daily net assets of the SMid Cap Fund.

After fee waivers and expense reimbursements, for the fiscal year ended September 30, 2013 CCA received $4,797,041 pursuant to the Earlier Agreement from the Small Cap Fund.  The SMid Cap Fund was not in operation during the fiscal year ended September 30, 2013.

 

The Adviser and the Advisory Agreement

If Proposals 2 and 3 are approved, CCA will continue its role in providing day-to-day investment management services to the Small Cap and SMid Cap Funds.

The following table sets forth the name, position and principal occupation of each chief executive officer and each director of CCA as of the consummation of the Transaction.  Each individual’s address will be 259 N. Radnor-Chester Road, Radnor Court, Suite 120, Radnor, PA 19087.

There were no brokerage commissions paid by the Small Cap and SMid Cap Funds to affiliated brokers of CCA for the fiscal year ended September 30, 2013.

A copy of the Advisory Agreement for the SMid Cap Fund is attached hereto as Appendix A.  A copy of the Advisory Agreement for the Small Cap Fund is attached hereto as Appendix B.  The following description is only a summary.  You should refer to Appendix A and Appendix B for the respective Advisory Agreement, and the description set forth in this Proxy Statement of the Advisory Agreement is qualified in its entirety by reference to Appendix A or Appendix B, as applicable.

Advisory Services.  Similar to CCA’s services under the Earlier Agreement, under the Advisory Agreement, CCA will provide certain investment advisory services to the Small Cap and SMid Cap Funds, including investment research and management, subject to the supervision of the Board and, upon written approval of the Trust, arrange for other companies to provide services to the Small Cap and SMid Cap Funds in the manner and to the extent that such services are reasonably necessary for the operation of the Small Cap and SMid Cap Funds.

Other Services Provided to the Small Cap Fund Under the Earlier Agreement .  Under the Earlier Agreement, CCA has undertaken to provide, or, upon receipt of written approval of the Trust, arrange for other companies to provide, a number of services to the Small Cap Fund in the manner and to the extent that such services are reasonably necessary for the operation of the Fund.  The additional services are:  (1) accounting services and functions; (2) non-litigation related legal and compliance services; (3) dividend disbursing agent, dividend reinvestment agent, transfer agent and registrar services and functions; (4) custodian and depository services and functions; (5) distribution, marketing, and/or underwriting services; (6) independent pricing services; (7) preparation of reports describing the operation of the Fund, including costs of providing such reports to broker-dealers, financial institutions and organizations which render services and assistance in connection with the distribution of shares of the Fund; (8) sub-accounting and recordkeeping services and functions; (9) shareholder and Board of Trustee communication services; and (10) other day-to-day administrative services.  These services were included in the Earlier Agreement for the Small Cap Fund but will not be a part of the services that CCA provides to the Small Cap Fund under the Advisory Agreement.  

Brokerage .  The Earlier Agreement and the Advisory Agreement both authorize CCA to select the brokers or dealers that will execute the purchases and sales of securities of the Small Cap and SMid Cap Funds and direct CCA to use its best efforts to obtain the best available price and most favorable execution.  CCA may pay a broker a commission in excess of that which another broker might have charged for effecting the same transaction, in recognition of the value of the research, or other services provided by the broker to CCA.  However, both the Earlier Agreement and the Advisory Agreement provide that such higher commissions will not be paid the Small Cap and SMid Cap Funds unless CCA determines the commissions are reasonable in relation to the value of services provided and satisfies other requirements.  Both the Earlier Agreement and the Advisory Agreement provide that CCA may, to the extent permitted by applicable laws and regulations, aggregate the securities to be sold or purchased with those of other Funds or of its other clients, subject to the policies set forth in the Small Cap and SMid Cap Funds’ prospectus and statement of additional information, if in CCA’s reasonable judgment, such aggregation will result in an overall economic benefit to the Small Cap and SMid Cap Funds.

Advisory Fees.  Under the Earlier Agreement for the Small Cap Fund, CCA is entitled to receive a fee of 1.20% of the average daily net assets of the Small Cap Fund.  The Advisory Agreement for the Small Cap Fund entitles CCA to receive 0.90% of the average daily net assets of the Small Cap Fund.  The Advisory Agreement for the SMid Cap Fund contains a fee structure identical to that of the Earlier Agreement.  CCA is entitled to receive an annual fee rate of 0.85% of the average daily net assets of the SMid Cap Fund.

Duration and Termination.  Like the Earlier Agreements, each Advisory Agreement provides that it will remain in force for an initial term of two years and from year to year thereafter, but only so long as such continuance is specifically approved at least annually by the vote of a majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on such approval and by a vote of the Board or of a majority of the outstanding voting securities of the Funds. The aforesaid requirement that continuance of the Advisory Agreement be specifically approved at least annually shall be construed in a manner consistent with the 1940 Act and the rules and regulations thereunder.  The Advisory Agreement may, on sixty (60) days’ written notice, be terminated at any time without the payment of any penalty, by the Board, or by vote of a majority of the outstanding voting securities of the Funds, or by the Adviser.  The Advisory Agreement will automatically terminate, without the payment of any penalty, in the event of its assignment (as defined in the 1940 Act).

Limitation on Liability and Indemnification.  Like the Earlier Agreements, the Advisory Agreements provide that in the absence of willful misfeasance, bad faith, or gross negligence in the performance of its duties, or by reason of its reckless disregard of obligations and duties under the Earlier Agreements and the Advisory Agreements on the part of CCA, or a breach of fiduciary duty with respect to receipt of compensation, neither CCA nor any of its directors, officers, shareholders, agents or employees shall be liable or responsible to the Trust, the Funds or to any shareholder of the funds for any error of judgment or mistake of law or for any act or omission in the course of, or connected with, rendering services under the Earlier Agreements or the Advisory Agreements or for any loss suffered by the Trust, a Fund or any shareholder of a Fund in connection with the performance of the Earlier Agreement or the Advisory Agreements.  Additionally, under the Earlier Agreements and the Advisory Agreements, the services of CCA to the Small Cap and SMid Cap Funds are not to be deemed exclusive and CCA may render similar services to others and engage in other activities.  Under the Earlier Agreements and the Advisory Agreements, the obligations of the Trust entered into in the name or on behalf thereof of any of the Trustees, representatives or agents are made not individually, but in such capacities and are not binding upon any of the Trustees, shareholders or representatives of the Trust personally but bind only the assets of the Trust, and all persons dealing with the Trust or a Fund must look solely to the assets of the Trust or Fund for the enforcement of any claims against the Trust or Fund.

BOARD APPROVAL AND RECOMMENDATION OF THE ADVISORY AGREEMENT

In reaching its decision to approve the Advisory Agreement, the Trustees, including all of the Independent Trustees, met in person at a meeting held on March 12, 2014 with senior executives of the Adviser, including Mr. Martindale, whose voting ownership in CCA will fall below 25% in the Transaction.  The Board reviewed information about the Transaction and its potential impact on the Small Cap and SMid Cap Funds, reviewed information about the continuity of personnel at CCA and its affiliates and considered the terms of the Advisory Agreements.  The Board and legal counsel to the Independent Trustees had an opportunity to review the information provided in advance of the meeting by CCA, including information pursuant to the requirements of Section 15(c) of the 1940 Act.  This information also included materials requested by legal counsel to the Independent Trustees that provided details concerning the terms of the Transaction and the financial stability of CCA.  

The Independent Trustees discussed the details of the Transaction with representatives of the Small Cap and SMid Cap Funds’ investment adviser, CCA.  The Independent Trustees noted that CCA will remain as the Small Cap and SMid Cap Funds’ investment adviser.  Following the Transaction, CCA will continue to operate as it had prior to the Transaction.  The Independent Trustees discussed that there were no expected changes in the portfolio managers currently providing advisory services to the Funds as a result of the Transaction, and reviewed the background and experience of each of the portfolio managers.  The Trustees noted that Mr. Martindale had transitioned out as a portfolio manager of the Small Cap Fund at the end of 2013 and that portfolio management for the Funds would remain the same. Further, the Independent Trustees discussed with CCA whether the services to be provided to the Funds were expected to change as a result of the Transaction.  CCA representatives noted that the advisory services to be provided to the Funds are not expected to change, including the manner in which investment decisions are made and executed. The Board noted that the Small Cap and SMid Cap Funds’ investment objectives and policies are not expected to change as a result of the Transaction.    

In the course of their review, the Trustees considered their legal responsibilities with regard to all factors deemed to be relevant to the Funds, including, but not limited to the following: (1) the quality of services to be provided to the Funds; (2) the performance of the Funds; (3) the Funds’ advisory fees and overall expenses; (4) the fact that the Transaction is not expected to affect the manner in which the Funds are advised; (5) the fact that the current portfolio management team will continue to manage the Funds; (6) the fact that the fee structure for the Small Cap Fund under its Advisory Agreement would change, with advisory fees decreasing from the Earlier Agreement, and that the fee structure for the SMid Cap Fund under the Advisory Agreement would be identical to the fee structure under the Earlier Agreement; and (7) other factors deemed relevant.   

The Trustees also evaluated the Advisory Agreement in light of information they had requested and received from the Adviser prior to the meeting.  The Trustees reviewed these materials with management of the Adviser and legal counsel to the Funds, the Adviser, and the Independent Trustees.  The Independent Trustees also discussed the Advisory Agreement in an executive session, at which no representatives of the Adviser were present.  The Trustees considered whether the Advisory Agreement would be in the best interests of the Funds and Shareholders and the overall fairness of the Advisory Agreement.  Among other things, the Trustees reviewed information concerning: (1) the nature, extent and quality of the services to be provided by the Adviser; (2) the Funds’ investment performance; (3) the cost of the services provided and the profits realized by the Adviser and its affiliates from their relationship with the Funds; (4) the extent to which economies of scale will be realized as the Funds grow and the extent to which fee levels reflect such economies of scale, if any, for the benefit of Shareholders; and (5) ancillary benefits and other factors.  In their deliberations, the Trustees did not rank the importance of any particular piece of information or factor considered, and it is presumed that each Trustee attributed different weights to the various factors.     

Nature, Extent and Quality of Services Provided to the Funds.

The Board considered information it believed necessary to assess the stability of CCA as a result of the Transaction and to assess the nature and quality of services to be provided to the Funds by CCA following the closing of the Transaction.  

Investment Performance of the Funds.  

The Board considered the investment experience of CCA, including the performance of the Funds, given that the Transaction is not expected to affect the manner in which the Funds are advised and that the current portfolio management team will continue to manage the Funds.

Costs of Services Provided and Profits Realized by the Adviser

In connection with the Trustees’ consideration of the level of the advisory fees, the Trustees considered a number of factors.  The Board’s analysis of the Funds’ advisory fees and estimated expenses included a discussion and review of data concerning the current fee and expense ratios of the Funds compared to a peer group.  

 

Economies of Scale and Fee Levels Reflecting Those Economies.

The Trustees considered the extent to which economies of scale were expected to be realized relative to fee levels as the Funds’ assets grow, and whether the advisory fee levels reflect these economies of scale for the benefit of the Funds.   

Other Benefits.  

In addition to the above factors, the Trustees also discussed other benefits received by CCA from its management of the Funds, including, without limitation, possible soft dollar benefits and the ability to market its advisory services for similar products in the future.   

Based on all of the foregoing, the Board recommends that Shareholders vote FOR Proposals 2 and 3 and approve the Advisory Agreements.  

PROPOSAL 4

TO APPROVE THE DISTRIBUTION PLAN PURSUANT TO RULE 12B-1, ATTACHED HERETO AS APPENDIX C BETWEEN CCA AND THE TRUST, ON BEHALF OF INVESTORS CLASS SHARES OF THE SMALL CAP FUND

Shareholders of Investors Class Shares of the Small Cap Fund (formerly known as “Shares” of the Small Cap Fund) will be asked to approve a distribution plan under Rule 12b-1 of the 1940 Act (the “Distribution Plan”).  

A distribution plan adopted under Rule 12b-1 of the 1940 Act is required to be approved by the affirmative vote of a majority of the Independent Trustees, as well as by a majority of the outstanding voting shares of the applicable classes of the Fund. In addition, the Distribution Plan is required to be continued at least annually by the Independent Trustees who have no direct or indirect interest in the operation of the Distribution Plan or any agreement related thereto.

The terms of the Distribution Plan provide that the Small Cap Fund may pay an annual fee of up to 0.25% of the Fund’s average daily net assets attributable to Investors Class Shares to the distributor, and that the distributor may retain all or a part of its fee as compensation for distribution or shareholder services it provides or it may use such fee for compensation of broker/dealers and other financial institutions and intermediaries that provide distribution or shareholder services as specified by the distributor.  CCA intends to limit the distribution fee paid by Investors Class Shares of the Small Cap Fund to an annual fee of 0.05% of the Fund’s average daily net assets attributable to Investors Class Shares.

Approval of the Distribution Plan requires the affirmative votes of a majority of the outstanding voting securities of Investors Class Shares of the Small Cap Fund.  “Majority” for these purposes, as permitted under the 1940 Act, means the vote of the lesser of (1) at least 67% of the outstanding Investors Class Shares of the Fund present at the Meeting if more than 50% of the outstanding shares are present or represented by proxy at the Meeting, or (2) more than 50% of the outstanding Investors Class Shares of the Fund.

BOARD APPROVAL AND RECOMMENDATION OF PROPOSAL 4

At a meeting held on March 12, 2014, which included a separate executive session attended only by the Independent Trustees and Fund counsel, the Trustees considered various factors when approving the Distribution Plan.  The factors considered included (i) whether the Distribution Plan was expected to result in benefits to the Fund’s Investors Class shareholders; (ii) the merits of alternative distribution methods, and (iii) the extent to which third parties may benefit from the Distribution Plan and how these benefits compare to the benefits to be experienced by the Fund.  The Independent Trustees who had no direct or indirect interest in the operation of the Distribution Plan or any agreement related thereto determined that there is a reasonable likelihood that the Distribution Plan will benefit the Small Cap Fund and its Investors Class Shareholders and that its costs are primarily intended to result in the sale of Investors Class Shares of the Small Cap Fund.  

ADDITIONAL INFORMATION

Other Matters.   No business other than the matters described above are expected to come before the Special Meeting, but should any other matter requiring a vote of Shareholders arise, including any question as to adjournment or postponement of the Special Meeting, the persons named as proxies will vote thereon in their discretion according to their best judgment in the interests of the Funds and their Shareholders.  

Principal Holders of the Funds.   The beneficial owners of more than 5% of the outstanding value of the Funds as of the Record Date are as follows:

Name and Address of Owner	Fund and  Number of Shares	Percentage of Fund

Security Ownership of Management.  As of the Record Date, the Trust’s Trustees and officers owned, in aggregate, [___]% of  the Funds.

Custodian, and Distributor.   UMB Bank, N.A., 928 Grand Boulevard, 5 ^th Floor, Kansas City, MO 64106 serves as custodian of the Funds’ cash balances and provides custodial services for the Funds.  Mutual Shareholder Services, LLC, 8000 Town Centre Drive, Suite 400, Broadview Heights, OH 44147, serves as Fund Administrator pursuant to a Accounting Services Agreement.  Arbor Court Capital, LLC, 2000 Auburn Drive, Suite 120, Cleveland, OH 44122, serves as the Small Cap and Smid Cap Funds’ distributor.  Rafferty Capital Markets, LLC, 1010 Franklin Avenue, Suite 300A, Garden City, NY 11530 serves as the LargeCap Fund’s distributor.

Shareholder Proposals and Procedures for Shareholder Communications with the Board .

The Trust is not required to, nor does it intend to, hold regular annual meetings of its shareholders.  If such an annual meeting is called, any shareholder who wishes to submit a proposal for consideration at the meeting should submit the proposal or notice of the proposal, if the shareholder chooses to include the proposal in the Trust’s proxy materials, to the Trust within a reasonable time prior to the Trust printing and mailing its proxy materials in accordance with, respectively, Rule 14a-8 or Rule 14a-4(c) under the Securities Exchange Act of 1934, as amended.

Audit Committee Report

For the fiscal year ended September 30, 2013, the Audit Committee has reviewed and discussed the audited financial statements with management.  The Audit Committee has also met with the Funds’ independent registered public accounting firm, BBD, LLP (“BBD”), and discussed with it certain matters required by the Statement on Auditing Standards No. 61, as amended, which includes, among other items, matters related to the conduct of the audit of the Funds’ financial statements.

The Audit Committee has received the written disclosures and the letter from BBD required by applicable requirements of the Public Company Accounting Oversight Board regarding BBD’s communications with the Audit Committee concerning independence and has discussed with BBD its independence from the Funds.

Based on such review and discussions, the Audit Committee recommended to the Board that the audited financial statements be included in the Funds annual report to shareholders for the fiscal year ended September 30, 2013 for filing with the SEC.

Independent Registered Public Accounting Firm

BBD has been selected as independent registered public accounting firm of the Funds and has served as such for at least the last two fiscal years of the Funds.  BBD examines annual financial statements for the Funds and reviews regular regulatory filings that include those financial statements.  Representatives of BBD are not expected to be present at the Meeting but have been given the opportunity to make a statement if they so desire and will be available to answer appropriate questions.

Audit Fees

The aggregate fees billed for each of the last two fiscal years for professional services rendered by BBD for the audit of the Funds’ annual financial statements or services that are normally provided by the accountant in connection with the statutory and regulatory fillings or engagements for those fiscal years are $36,400 for the fiscal year ended September 30, 2013 and $34,400 for the fiscal year ended September 30, 2012.

Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by BBD that are reasonably related to the performance of the audit of the Funds’ financial statements and are not reported under Audit Fees are $0 for the fiscal year ended September 30, 2013 and $0 for the fiscal year ended September 30, 2012.

Tax Fees

The aggregate fees billed in each of the last two fiscal years for professional services rendered by BBD for tax compliance, tax advice, and tax planning are $6,100 for the fiscal year ended September 30, 2013 and $6,100 for the fiscal year ended September 30, 2012.

All Other Fees

The aggregate fees billed in each of the last two fiscal years for products and services provided by BBD other than the services reported above were $0 for the fiscal year ended September 30, 2013 and $0 for the fiscal year ended September 30, 2012.

Pre-Approval Policies and Procedures; Adviser Affiliates

The Audit Committee must pre-approve the audit and non-audit services of the independent auditor prior to the independent auditor’s engagement.  The Funds did not pay any “audit-related fees,” “tax fees” or “all other fees,” as described above.

The percentage of fees billed by BBD applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:

	FISCAL YEAR ENDED 9/30/2013		FISCAL YEAR ENDED 9/30/2012
Audit-Related
Fees	0%		0%
Tax Fees	0%		0%
All Other Fees	0%		0%

All of the principal accountant’s hours spent on auditing the registrant’s financial statements were attributed to work performed by full-time permanent employees of the principal accountant.

The aggregate non-audit fees by BBD for services rendered to the Funds and rendered to CCA and Institutional Advisors, LLC and any entity controlling, controlled by, or under common control with CCA and Institutional Advisors, LLC that provides ongoing services to the Funds for each of the last two fiscal years was $0 for the fiscal year ended September 30, 2013 and $0 for the fiscal year ended September 30, 2012.

Dated:  [___________ __], 2014

PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY/VOTING INSTRUCTION CARD IN THE ENCLOSED ENVELOPE.  YOU MAY PROXY VOTE BY INTERNET OR TELEPHONE IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH ON THE ENCLOSED PROXY/VOTING INSTRUCTION CARD.  NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.

Appendix A

INVESTMENT ADVISORY AGREEMENT

This AGREEMENT (the “Agreement”) made this [__] day of [__________] 2014, by and between Conestoga Funds, a Delaware business trust which may issue one or more series of shares of beneficial interest (the “Trust”), and Conestoga Capital Advisors, LLC, a Delaware limited liability company (the “Adviser”).

WHEREAS, the Trust is registered as an open-end, management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS, the Trust desires to retain the Adviser to furnish investment advisory services to the funds listed on Schedule A (each, a “Fund” and collectively, the “Funds”), and the Adviser represents that it is willing and possesses legal authority to so furnish such services;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is agreed between the parties hereto as follows:

1.

Appointment.

(a)

General. The Trust hereby appoints the Adviser to act as investment adviser to the Funds for the period and on the terms set forth in this Agreement. The Adviser accepts such appointment and agrees to furnish the services herein set forth for the compensation herein provided.

(b)

Employees of Affiliates . The Adviser may, in its discretion, provide such services through its own employees or the employees of one or more affiliated companies that are qualified to act as an investment adviser to the Trust under applicable laws; provided that (i) all persons, when providing services hereunder, are functioning as part of an organized group of persons, and (ii) such organized group of persons is managed at all times by authorized officers of the Adviser.

(c)

Sub-Advisers . It is understood and agreed that the Adviser may from time to time employ or associate with such other entities or persons as the Adviser believes appropriate to assist in the performance of this Agreement with respect to a particular Fund or Funds (each a “Sub-Adviser”), and that any such Sub-Adviser shall have all of the rights and powers of the Adviser set forth in this Agreement; provided that a Fund shall not pay any additional compensation for any Sub-Adviser and the Adviser shall be as fully responsible to the Trust for the acts and omissions of the Sub-Adviser as it is for its own acts and omissions; and provided further that the retention of any Sub-Adviser shall be approved in advance by (i) the Board of Trustees of the Trust (the “Board”) and (ii) the shareholders of the relevant Fund if required under any applicable provisions of the 1940 Act or any exemptive relief granted thereunder. The Adviser will review, monitor and report to the Trust’s Board regarding the performance and investment procedures of any Sub-Adviser. In the event that the services of any Sub-Adviser are terminated, the Adviser may provide investment advisory services pursuant to this Agreement to the Fund without a Sub-Adviser or employ another Sub-Adviser without further shareholder approval, to the extent consistent with the 1940 Act or any exemptive relief granted thereunder. A Sub-Adviser may be an affiliate of the Adviser.

2.

Delivery of Documents . The Trust has delivered to the Adviser copies of each of the following documents, and will promptly deliver to it all future amendments and supplements thereto, if any:

(1)

the Trust’s Trust Instrument;

(2)

the Bylaws of the Trust;

(3)

resolutions of the Board of the Trust authorizing the execution and delivery of this Agreement;

(4)

the Trust’s Registration Statement under the Securities Act of 1933, as amended (the “1933 Act”), and the 1940 Act, on Form N-1A as filed with the U.S. Securities and Exchange Commission (the “Commission”);

(5)

Notification of Registration of the Trust under the 1940 Act on Form N-8A as filed with the Commission; and

(6)

the currently effective Prospectus and Statement of Additional Information of the Funds.

3.

Investment Advisory .

(a)

Management of the Funds . The Adviser hereby undertakes to act as investment adviser to the Funds. The Adviser shall regularly provide investment advice to the Funds and continuously supervise the investment and reinvestment of cash, securities and other property composing the assets of the Funds and, in furtherance thereof, shall:

(i)

supervise all aspects of the operations of the Trust and each Fund;

(ii)

obtain and evaluate pertinent economic, statistical and financial data, as well as other significant events and developments, which affect the economy generally, the Funds’ investment programs, and the issuers of securities included in the Funds’ portfolios and the industries in which they engage, or which may relate to securities or other investments which the Adviser may deem desirable for inclusion in a Fund’s portfolio;

(iii)

determine which issuers and securities shall be included in the portfolio of each Fund;

(iv)

furnish a continuous investment program for each Fund;

(v)

in its discretion and without prior consultation with the Trust, buy, sell, lend and otherwise trade any stocks, bonds and other securities and investment instruments on behalf of each Fund; and

(vi)

take, on behalf of each Fund, all actions the Adviser may deem necessary in order to carry into effect such investment program and the Adviser’s functions as provided above, including the making of appropriate periodic reports to the Trust’s Board of Trustees.

(b)

Covenants . The Adviser shall carry out its investment advisory, other and supervisory responsibilities in a manner consistent with the investment objectives, policies, and restrictions provided in: (i) the Funds’ Prospectus and Statement of Additional Information as revised and in effect from time to time; (ii) the Trust’s Trust Instrument, Bylaws or other governing instruments, as amended from time to time; (iii) the 1940 Act; (iv) other applicable laws; and (v) such other investment policies, procedures and/or limitations as may be adopted by the Trust with respect to a Fund and provided to the Adviser in writing. The Adviser agrees to use reasonable efforts to manage each Fund so that it will qualify, and continue to qualify, as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and regulations issued thereunder (the “Code”), except as may be authorized to the contrary by the Trust’s Board. The management of the Funds by the Adviser shall at all times be subject to the review of the Trust’s Board.

(c)

Books and Records . Pursuant to applicable law, the Adviser shall keep each Fund’s books and records required to be maintained by, or on behalf of, the Funds with respect to advisory services rendered hereunder. The Adviser agrees that all records which it maintains for a Fund are the property of the Fund and it will promptly surrender any of such records to the Fund upon the Fund’s request. The Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such records of the Fund required to be preserved by such Rule.

(d)

Reports, Evaluations and other Services . The Adviser shall furnish reports, evaluations, information or analyses to the Trust with respect to the Funds and in connection with the Adviser’s services hereunder as the Trust’s Board may request from time to time or as the Adviser may otherwise deem to be desirable. The Adviser shall make recommendations to the Trust’s Board with respect to Trust policies, and shall carry out such policies as are adopted by the Board. The Adviser shall, subject to review by the Board, furnish such other services as the Adviser shall from time to time determine to be necessary or useful to perform its obligations under this Agreement.

(e)

Purchase and Sale of Securities . The Adviser shall place all orders for the purchase and sale of portfolio securities for each Fund with brokers or dealers selected by the Adviser, which may include brokers or dealers affiliated with the Adviser to the extent permitted by the 1940 Act and the Trust’s policies and procedures applicable to the Funds. The Adviser shall use its best efforts to seek to execute portfolio transactions at prices which, under the circumstances, result in total costs or proceeds being the most favorable to the Funds. In assessing the best overall terms available for any transaction, the Adviser shall consider all factors it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, research services provided to the Adviser, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. In no event shall the Adviser be under any duty to obtain the lowest commission or the best net price for any Fund on any particular transaction, nor shall the Adviser be under any duty to execute any order in a fashion either preferential to any Fund relative to other accounts managed by the Adviser or otherwise materially adverse to such other accounts.

(f)

Selection of Brokers or Dealers . In selecting brokers or dealers qualified to execute a particular transaction, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) to the Adviser and/or the other accounts over which the Adviser exercises investment discretion. The Adviser is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for the Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Adviser determines in good faith that the total commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the overall responsibilities of the Adviser with respect to accounts over which it exercises investment discretion. The Adviser shall report to the Board regarding overall commissions paid by the Fund and their reasonableness in relation to their benefits to the Fund. Any transactions for the Fund that are effected through an affiliated broker-dealer on a national securities exchange of which such broker-dealer is a member will be effected in accordance with Section 11(a) of the 1934 Act, and the regulations promulgated thereunder, including Rule 11a2-2(T). The Fund hereby authorizes any such broker or dealer to retain commissions for effecting such transactions and to pay out of such retained commissions any compensation due to others in connection with effectuating those transactions.

(g)

Aggregation of Securities Transactions . In executing portfolio transactions for a Fund, the Adviser may, to the extent permitted by applicable laws and regulations, but shall not be obligated to, aggregate the securities to be sold or purchased with those of other Funds or its other clients if, in the Adviser’s reasonable judgment, such aggregation (i) will result in an overall economic benefit to the Fund, taking into consideration the advantageous selling or purchase price, brokerage commission and other expenses, and trading requirements, and (ii) is not inconsistent with the policies set forth in the Trust’s registration statement and the Fund’s Prospectus and Statement of Additional Information. In such event, the Adviser will allocate the securities so purchased or sold, and the expenses incurred in the transaction, in an equitable manner, consistent with its fiduciary obligations to the Fund and such other clients.

4.

Representations and Warranties .

(a)

The Adviser hereby represents and warrants to the Trust as follows:

(i)

The Adviser is a limited liability company duly organized and in good standing under the laws of the State of Delaware and is fully authorized to enter into this Agreement and carry out its duties and obligations hereunder.

(ii)

The Adviser is registered as an investment adviser with the Commission under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and is registered or licensed as an investment adviser under the laws of all applicable jurisdictions. The Adviser shall maintain such registrations or licenses in effect at all times during the term of this Agreement.

(iii)

The Adviser at all times shall provide its best judgment and effort to the Trust in carrying out the Adviser’s obligations hereunder.

(b)

The Trust hereby represents and warrants to the Adviser as follows:

(i)

The Trust has been duly organized as a business trust under the laws of the State of Delaware and is authorized to enter into this Agreement and carry out its terms.

(ii)

The Trust is registered as an investment company with the Commission under the 1940 Act and shares of each Fund are registered for offer and sale to the public under the 1933 Act and all applicable state securities laws where currently sold. Such registrations will be kept in effect during the term of this Agreement.

5.

Compensation . As compensation for the services which the Adviser is to provide or cause to be provided pursuant to Paragraph 3, each Fund shall pay to the Adviser out of Fund assets an annual fee, computed and accrued daily and paid in arrears on the first business day of every month, at the rate set forth opposite each Fund’s name on Schedule A, which shall be a percentage of the average daily net assets of the Fund (computed in the manner set forth in the Fund’s most recent Prospectus and Statement of Additional Information) determined as of the close of business on each business day throughout the month. At the request of the Adviser, some or all of such fee shall be paid directly to a Sub-Adviser. The fee for any partial month under this Agreement shall be calculated on a proportionate basis.

In the event that the total expenses of a Fund exceed the limits on investment company expenses imposed by any statute or any regulatory authority of any jurisdiction in which shares of such Fund are qualified for offer and sale, the Adviser will bear the amount of such excess, except: (i) the Adviser shall not be required to bear such excess to an extent greater than the compensation due to the Adviser for the period for which such expense limitation is required to be calculated unless such statute or regulatory authority shall so require, and (ii) the Adviser shall not be required to bear the expenses of the Fund to an extent which would result in the Fund’s or Trust’s inability to qualify as a regulated investment company under the provisions of Subchapter M of the Code.

The Adviser shall have the right, but not the obligation, to voluntarily defer any portion of the advisory fee or absorb any portion of the expenses described in Section 7 below.

6.

Interested Persons . It is understood that, to the extent consistent with applicable laws, the Trustees, officers and shareholders of the Trust are or may be or become interested in the Adviser as directors, officers or otherwise and that directors, officers and shareholders of the Adviser are or may be or become similarly interested in the Trust.

7.

Expenses . As between the Adviser and the Funds, the Funds will pay for all their expenses other than those expressly stated to be payable by the Adviser hereunder.

8.

Non-Exclusive Services; Limitation of Adviser’s Liability . The services of the Adviser to the Funds are not to be deemed exclusive and the Adviser may render similar services to others and engage in other activities. The Adviser and its affiliates may enter into other agreements with the Funds and the Trust for providing additional services to the Funds and the Trust which are not covered by this Agreement, and to receive additional compensation for such services. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Adviser, or a breach of fiduciary duty with respect to receipt of compensation, neither the Adviser nor any of its directors, officers, shareholders, agents, or employees shall be liable or responsible to the Trust, the Funds or to any shareholder of the Funds for any error of judgment or mistake of law or for any act or omission in the course of, or connected with, rendering services hereunder or for any loss suffered by the Trust, a Fund or any shareholder of a Fund in connection with the performance of this Agreement.

9.

Effective Date; Modifications; Termination . This Agreement shall become effective as of the date first written above, provided that it shall have been approved by a majority of the outstanding voting securities of each Fund, in accordance with the requirements of the 1940 Act, or such later date as may be agreed by the parties following such shareholder approval.

(a)

This Agreement shall continue in force for a period of two years from the date of this Agreement. Thereafter, this Agreement shall continue in effect as to each Fund for successive annual periods, provided such continuance is specifically approved at least annually (i) by a vote of the majority of the Trustees of the Trust who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval and (ii) by a vote of the Board of the Trust or a majority of the outstanding voting shares of the Fund.

(b)

The modification of any of the non-material terms of this Agreement may be approved by a vote of a majority of those Trustees of the Trust who are not interested persons of any party to this Agreement, cast in person at a meeting called for the purpose of voting on such approval.

(c)

Notwithstanding the foregoing provisions of this Paragraph 9, either party hereto may terminate this Agreement at any time on sixty (60) days’ prior written notice to the other, without payment of any penalty. Such a termination by the Trust may be effected severally as to any particular Fund, and shall be effected as to any Fund by vote of the Trust’s Board or by vote of a majority of the outstanding voting securities of the Fund. This Agreement shall terminate automatically in the event of its assignment.

10.

Limitation of Liability of Trustees and Shareholders . The Adviser acknowledges the following limitation of liability:

The terms “Conestoga Funds” and “Trustees” refer, respectively, to the trust created and the Trustees, as trustees but not individually or personally, acting from time to time under the Trust Instrument, to which reference is hereby made and a copy of which is on file at the office of the Secretary of State of the State of Delaware, such reference being inclusive of any and all amendments thereto so filed or hereafter filed. The obligations of “Conestoga Funds” entered into in the name or on behalf thereof by any of the Trustees, representatives or agents are made not individually, but in such capacities and are not binding upon any of the Trustees, shareholders or representatives of the Trust personally, but bind only the assets of the Trust, and all persons dealing with the Trust or a Fund must look solely to the assets of the Trust or Fund for the enforcement of any claims against the Trust or Fund.

11.

Service Mark . The service mark of the Trust and the name “Conestoga Funds” (and derivatives thereof) have been licensed to the Trust by the Adviser and their continued use is subject to the right of the Adviser to withdraw this permission in the event the Adviser is not the investment adviser to the Trust.

12.

Certain Definitions . The terms “vote of a majority of the outstanding voting securities,” “assignment,” “control,” and “interested persons,” when used herein, shall have the respective meanings specified in the 1940 Act. References in this Agreement to the 1940 Act and the Advisers Act shall be construed as references to such laws as now in effect or as hereafter amended, and shall be understood as inclusive of any applicable rules, interpretations and/or orders adopted or issued thereunder by the Commission.

13.

Independent Contractor . The Adviser shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise expressly provided herein or authorized by the Board of the Trust from time to time, have no authority to act for or represent a Fund in any way or otherwise be deemed an agent of a Fund.

14.

Structure of Agreement . The Trust is entering into this Agreement on behalf of the Funds listed on Schedule A, severally and not jointly. The responsibilities and benefits set forth in this Agreement shall refer to each Fund severally and not jointly. No Fund shall have any responsibility for any obligation of any other Fund arising out of this Agreement. Without otherwise limiting the generality of the foregoing:

(a)

any breach of any term of this Agreement regarding the Trust with respect to any one Fund shall not create a right or obligation with respect to any other Fund;

(b)

under no circumstances shall the Adviser have the right to set off claims relating to a Fund by applying property of any other Fund; and

(c)

the business and contractual relationships created by this Agreement, consideration for entering into this Agreement, and the consequences of such relationship and consideration relate solely to the Trust and the particular Fund to which such relationship and consideration applies.

This Agreement is intended to govern only the relationships between the Adviser, on the one hand, and the Trust and the Funds, on the other hand, and (except as specifically provided above in this Paragraph 14) is not intended to and shall not govern (i) the relationship between the Trust and any Fund or (ii) the relationships among the respective Funds.

15.

Governing Law . This Agreement shall be governed by the laws of the State of Delaware, provided that nothing herein shall be construed in a manner inconsistent with the 1940 Act or the Advisers Act.

16.

Severability . If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby and, to this extent, the provisions of this Agreement shall be deemed to be severable.

17.

Notices . Notices of any kind to be given to the Trust hereunder by the Adviser shall be in writing and shall be duly given if mailed or delivered to:

Conestoga Funds

259 N. Radnor-Chester Road
Radnor Court, Suite 120
Radnor, PA 19087

Attention: William C. Martindale, Jr.

President

with a copy to:

Drinker Biddle Reath LLP

One Logan Square, Ste 2000

Philadelphia, PA 19103

Attention: Joshua B. Deringer, Esq.

or at such other address or to such individual as shall be so specified by the Trust to the Adviser. Notices of any kind to be given to the Adviser hereunder by the Trust shall be in writing and shall be duly given if mailed or delivered to the Adviser at:

Conestoga Capital Advisors, LLC

259 N. Radnor-Chester Road
Radnor Court, Suite 120
Radnor, PA 19087

Attention: Duane R. D’Orazio

Managing Partner

or at such other address or to such individual as shall be so specified by the Adviser to the Trust. Notices shall be effective upon delivery.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date written above.

SCHEDULE A

to the

INVESTMENT ADVISORY AGREEMENT

between

CONESTOGA FUNDS and CONESTOGA CAPITAL ADVISORS, LLC

Approved by the Board of Trustees: [__________ _], 2014

Appendix B

INVESTMENT ADVISORY AGREEMENT

This AGREEMENT (the “Agreement”) made this [__] day of [__________] 2014, by and between Conestoga Funds, a Delaware business trust which may issue one or more series of shares of beneficial interest (the “Trust”), and Conestoga Capital Advisors, LLC, a Delaware limited liability company (the “Adviser”).

WHEREAS, the Trust is registered as an open-end, management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS, the Trust desires to retain the Adviser to furnish investment advisory services to the funds listed on Schedule A (each, a “Fund” and collectively, the “Funds”), and the Adviser represents that it is willing and possesses legal authority to so furnish such services;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is agreed between the parties hereto as follows:

1.

Appointment.

(a)

General. The Trust hereby appoints the Adviser to act as investment adviser to the Funds for the period and on the terms set forth in this Agreement. The Adviser accepts such appointment and agrees to furnish the services herein set forth for the compensation herein provided.

(b)

Employees of Affiliates . The Adviser may, in its discretion, provide such services through its own employees or the employees of one or more affiliated companies that are qualified to act as an investment adviser to the Trust under applicable laws; provided that (i) all persons, when providing services hereunder, are functioning as part of an organized group of persons, and (ii) such organized group of persons is managed at all times by authorized officers of the Adviser.

(c)

Sub-Advisers . It is understood and agreed that the Adviser may from time to time employ or associate with such other entities or persons as the Adviser believes appropriate to assist in the performance of this Agreement with respect to a particular Fund or Funds (each a “Sub-Adviser”), and that any such Sub-Adviser shall have all of the rights and powers of the Adviser set forth in this Agreement; provided that a Fund shall not pay any additional compensation for any Sub-Adviser and the Adviser shall be as fully responsible to the Trust for the acts and omissions of the Sub-Adviser as it is for its own acts and omissions; and provided further that the retention of any Sub-Adviser shall be approved in advance by (i) the Board of Trustees of the Trust (the “Board”) and (ii) the shareholders of the relevant Fund if required under any applicable provisions of the 1940 Act or any exemptive relief granted thereunder. The Adviser will review, monitor and report to the Trust’s Board regarding the performance and investment procedures of any Sub-Adviser. In the event that the services of any Sub-Adviser are terminated, the Adviser may provide investment advisory services pursuant to this Agreement to the Fund without a Sub-Adviser or employ another Sub-Adviser without further shareholder approval, to the extent consistent with the 1940 Act or any exemptive relief granted thereunder. A Sub-Adviser may be an affiliate of the Adviser.

2.

Delivery of Documents . The Trust has delivered to the Adviser copies of each of the following documents, and will promptly deliver to it all future amendments and supplements thereto, if any:

(1)

the Trust’s Trust Instrument;

(2)

the Bylaws of the Trust;

(3)

resolutions of the Board of the Trust authorizing the execution and delivery of this Agreement;

(4)

the Trust’s Registration Statement under the Securities Act of 1933, as amended (the “1933 Act”), and the 1940 Act, on Form N-1A as filed with the U.S. Securities and Exchange Commission (the “Commission”);

(5)

Notification of Registration of the Trust under the 1940 Act on Form N-8A as filed with the Commission; and

(6)

the currently effective Prospectus and Statement of Additional Information of the Funds.

3.

Investment Advisory .

(a)

Management of the Funds . The Adviser hereby undertakes to act as investment adviser to the Funds. The Adviser shall regularly provide investment advice to the Funds and continuously supervise the investment and reinvestment of cash, securities and other property composing the assets of the Funds and, in furtherance thereof, shall:

(i)

supervise all aspects of the operations of the Trust and each Fund;

(ii)

obtain and evaluate pertinent economic, statistical and financial data, as well as other significant events and developments, which affect the economy generally, the Funds’ investment programs, and the issuers of securities included in the Funds’ portfolios and the industries in which they engage, or which may relate to securities or other investments which the Adviser may deem desirable for inclusion in a Fund’s portfolio;

(iii)

determine which issuers and securities shall be included in the portfolio of each Fund;

(iv)

furnish a continuous investment program for each Fund;

(v)

in its discretion and without prior consultation with the Trust, buy, sell, lend and otherwise trade any stocks, bonds and other securities and investment instruments on behalf of each Fund; and

(vi)

take, on behalf of each Fund, all actions the Adviser may deem necessary in order to carry into effect such investment program and the Adviser’s functions as provided above, including the making of appropriate periodic reports to the Trust’s Board of Trustees.

(b)

Covenants . The Adviser shall carry out its investment advisory, other and supervisory responsibilities in a manner consistent with the investment objectives, policies, and restrictions provided in: (i) the Funds’ Prospectus and Statement of Additional Information as revised and in effect from time to time; (ii) the Trust’s Trust Instrument, Bylaws or other governing instruments, as amended from time to time; (iii) the 1940 Act; (iv) other applicable laws; and (v) such other investment policies, procedures and/or limitations as may be adopted by the Trust with respect to a Fund and provided to the Adviser in writing. The Adviser agrees to use reasonable efforts to manage each Fund so that it will qualify, and continue to qualify, as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and regulations issued thereunder (the “Code”), except as may be authorized to the contrary by the Trust’s Board. The management of the Funds by the Adviser shall at all times be subject to the review of the Trust’s Board.

(c)

Books and Records . Pursuant to applicable law, the Adviser shall keep each Fund’s books and records required to be maintained by, or on behalf of, the Funds with respect to advisory services rendered hereunder. The Adviser agrees that all records which it maintains for a Fund are the property of the Fund and it will promptly surrender any of such records to the Fund upon the Fund’s request. The Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such records of the Fund required to be preserved by such Rule.

(d)

Reports, Evaluations and other Services . The Adviser shall furnish reports, evaluations, information or analyses to the Trust with respect to the Funds and in connection with the Adviser’s services hereunder as the Trust’s Board may request from time to time or as the Adviser may otherwise deem to be desirable. The Adviser shall make recommendations to the Trust’s Board with respect to Trust policies, and shall carry out such policies as are adopted by the Board. The Adviser shall, subject to review by the Board, furnish such other services as the Adviser shall from time to time determine to be necessary or useful to perform its obligations under this Agreement.

(e)

Purchase and Sale of Securities . The Adviser shall place all orders for the purchase and sale of portfolio securities for each Fund with brokers or dealers selected by the Adviser, which may include brokers or dealers affiliated with the Adviser to the extent permitted by the 1940 Act and the Trust’s policies and procedures applicable to the Funds. The Adviser shall use its best efforts to seek to execute portfolio transactions at prices which, under the circumstances, result in total costs or proceeds being the most favorable to the Funds. In assessing the best overall terms available for any transaction, the Adviser shall consider all factors it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, research services provided to the Adviser, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. In no event shall the Adviser be under any duty to obtain the lowest commission or the best net price for any Fund on any particular transaction, nor shall the Adviser be under any duty to execute any order in a fashion either preferential to any Fund relative to other accounts managed by the Adviser or otherwise materially adverse to such other accounts.

(f)

Selection of Brokers or Dealers . In selecting brokers or dealers qualified to execute a particular transaction, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) to the Adviser and/or the other accounts over which the Adviser exercises investment discretion. The Adviser is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for the Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Adviser determines in good faith that the total commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the overall responsibilities of the Adviser with respect to accounts over which it exercises investment discretion. The Adviser shall report to the Board regarding overall commissions paid by the Fund and their reasonableness in relation to their benefits to the Fund. Any transactions for the Fund that are effected through an affiliated broker-dealer on a national securities exchange of which such broker-dealer is a member will be effected in accordance with Section 11(a) of the 1934 Act, and the regulations promulgated thereunder, including Rule 11a2-2(T). The Fund hereby authorizes any such broker or dealer to retain commissions for effecting such transactions and to pay out of such retained commissions any compensation due to others in connection with effectuating those transactions.

(g)

Aggregation of Securities Transactions . In executing portfolio transactions for a Fund, the Adviser may, to the extent permitted by applicable laws and regulations, but shall not be obligated to, aggregate the securities to be sold or purchased with those of other Funds or its other clients if, in the Adviser’s reasonable judgment, such aggregation (i) will result in an overall economic benefit to the Fund, taking into consideration the advantageous selling or purchase price, brokerage commission and other expenses, and trading requirements, and (ii) is not inconsistent with the policies set forth in the Trust’s registration statement and the Fund’s Prospectus and Statement of Additional Information. In such event, the Adviser will allocate the securities so purchased or sold, and the expenses incurred in the transaction, in an equitable manner, consistent with its fiduciary obligations to the Fund and such other clients.

4.

Representations and Warranties .

(a)

The Adviser hereby represents and warrants to the Trust as follows:

(i)

The Adviser is a limited liability company duly organized and in good standing under the laws of the State of Delaware and is fully authorized to enter into this Agreement and carry out its duties and obligations hereunder.

(ii)

The Adviser is registered as an investment adviser with the Commission under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and is registered or licensed as an investment adviser under the laws of all applicable jurisdictions. The Adviser shall maintain such registrations or licenses in effect at all times during the term of this Agreement.

(iii)

The Adviser at all times shall provide its best judgment and effort to the Trust in carrying out the Adviser’s obligations hereunder.

(b)

The Trust hereby represents and warrants to the Adviser as follows:

(i)

The Trust has been duly organized as a business trust under the laws of the State of Delaware and is authorized to enter into this Agreement and carry out its terms.

(ii)

The Trust is registered as an investment company with the Commission under the 1940 Act and shares of each Fund are registered for offer and sale to the public under the 1933 Act and all applicable state securities laws where currently sold. Such registrations will be kept in effect during the term of this Agreement.

5.

Compensation . As compensation for the services which the Adviser is to provide or cause to be provided pursuant to Paragraph 3, each Fund shall pay to the Adviser out of Fund assets an annual fee, computed and accrued daily and paid in arrears on the first business day of every month, at the rate set forth opposite each Fund’s name on Schedule A, which shall be a percentage of the average daily net assets of the Fund (computed in the manner set forth in the Fund’s most recent Prospectus and Statement of Additional Information) determined as of the close of business on each business day throughout the month. At the request of the Adviser, some or all of such fee shall be paid directly to a Sub-Adviser. The fee for any partial month under this Agreement shall be calculated on a proportionate basis.

In the event that the total expenses of a Fund exceed the limits on investment company expenses imposed by any statute or any regulatory authority of any jurisdiction in which shares of such Fund are qualified for offer and sale, the Adviser will bear the amount of such excess, except: (i) the Adviser shall not be required to bear such excess to an extent greater than the compensation due to the Adviser for the period for which such expense limitation is required to be calculated unless such statute or regulatory authority shall so require, and (ii) the Adviser shall not be required to bear the expenses of the Fund to an extent which would result in the Fund’s or Trust’s inability to qualify as a regulated investment company under the provisions of Subchapter M of the Code.

The Adviser shall have the right, but not the obligation, to voluntarily defer any portion of the advisory fee or absorb any portion of the expenses described in Section 7 below.

6.

Interested Persons . It is understood that, to the extent consistent with applicable laws, the Trustees, officers and shareholders of the Trust are or may be or become interested in the Adviser as directors, officers or otherwise and that directors, officers and shareholders of the Adviser are or may be or become similarly interested in the Trust.

7.

Expenses . As between the Adviser and the Funds, the Funds will pay for all their expenses other than those expressly stated to be payable by the Adviser hereunder.

8.

Non-Exclusive Services; Limitation of Adviser’s Liability . The services of the Adviser to the Funds are not to be deemed exclusive and the Adviser may render similar services to others and engage in other activities. The Adviser and its affiliates may enter into other agreements with the Funds and the Trust for providing additional services to the Funds and the Trust which are not covered by this Agreement, and to receive additional compensation for such services. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Adviser, or a breach of fiduciary duty with respect to receipt of compensation, neither the Adviser nor any of its directors, officers, shareholders, agents, or employees shall be liable or responsible to the Trust, the Funds or to any shareholder of the Funds for any error of judgment or mistake of law or for any act or omission in the course of, or connected with, rendering services hereunder or for any loss suffered by the Trust, a Fund or any shareholder of a Fund in connection with the performance of this Agreement.

9.

Effective Date; Modifications; Termination . This Agreement shall become effective as of the date first written above, provided that it shall have been approved by a majority of the outstanding voting securities of each Fund, in accordance with the requirements of the 1940 Act, or such later date as may be agreed by the parties following such shareholder approval.

(a)

This Agreement shall continue in force for a period of two years from the date of this Agreement. Thereafter, this Agreement shall continue in effect as to each Fund for successive annual periods, provided such continuance is specifically approved at least annually (i) by a vote of the majority of the Trustees of the Trust who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval and (ii) by a vote of the Board of the Trust or a majority of the outstanding voting shares of the Fund.

(b)

The modification of any of the non-material terms of this Agreement may be approved by a vote of a majority of those Trustees of the Trust who are not interested persons of any party to this Agreement, cast in person at a meeting called for the purpose of voting on such approval.

(c)

Notwithstanding the foregoing provisions of this Paragraph 9, either party hereto may terminate this Agreement at any time on sixty (60) days’ prior written notice to the other, without payment of any penalty. Such a termination by the Trust may be effected severally as to any particular Fund, and shall be effected as to any Fund by vote of the Trust’s Board or by vote of a majority of the outstanding voting securities of the Fund. This Agreement shall terminate automatically in the event of its assignment.

10.

Limitation of Liability of Trustees and Shareholders . The Adviser acknowledges the following limitation of liability:

The terms “Conestoga Funds” and “Trustees” refer, respectively, to the trust created and the Trustees, as trustees but not individually or personally, acting from time to time under the Trust Instrument, to which reference is hereby made and a copy of which is on file at the office of the Secretary of State of the State of Delaware, such reference being inclusive of any and all amendments thereto so filed or hereafter filed. The obligations of “Conestoga Funds” entered into in the name or on behalf thereof by any of the Trustees, representatives or agents are made not individually, but in such capacities and are not binding upon any of the Trustees, shareholders or representatives of the Trust personally, but bind only the assets of the Trust, and all persons dealing with the Trust or a Fund must look solely to the assets of the Trust or Fund for the enforcement of any claims against the Trust or Fund.

11.

Service Mark . The service mark of the Trust and the name “Conestoga Funds” (and derivatives thereof) have been licensed to the Trust by the Adviser and their continued use is subject to the right of the Adviser to withdraw this permission in the event the Adviser is not the investment adviser to the Trust.

12.

Certain Definitions . The terms “vote of a majority of the outstanding voting securities,” “assignment,” “control,” and “interested persons,” when used herein, shall have the respective meanings specified in the 1940 Act. References in this Agreement to the 1940 Act and the Advisers Act shall be construed as references to such laws as now in effect or as hereafter amended, and shall be understood as inclusive of any applicable rules, interpretations and/or orders adopted or issued thereunder by the Commission.

13.

Independent Contractor . The Adviser shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise expressly provided herein or authorized by the Board of the Trust from time to time, have no authority to act for or represent a Fund in any way or otherwise be deemed an agent of a Fund.

14.

Structure of Agreement . The Trust is entering into this Agreement on behalf of the Funds listed on Schedule A, severally and not jointly. The responsibilities and benefits set forth in this Agreement shall refer to each Fund severally and not jointly. No Fund shall have any responsibility for any obligation of any other Fund arising out of this Agreement. Without otherwise limiting the generality of the foregoing:

(a)

any breach of any term of this Agreement regarding the Trust with respect to any one Fund shall not create a right or obligation with respect to any other Fund;

(b)

under no circumstances shall the Adviser have the right to set off claims relating to a Fund by applying property of any other Fund; and

(c)

the business and contractual relationships created by this Agreement, consideration for entering into this Agreement, and the consequences of such relationship and consideration relate solely to the Trust and the particular Fund to which such relationship and consideration applies.

This Agreement is intended to govern only the relationships between the Adviser, on the one hand, and the Trust and the Funds, on the other hand, and (except as specifically provided above in this Paragraph 14) is not intended to and shall not govern (i) the relationship between the Trust and any Fund or (ii) the relationships among the respective Funds.

15.

Governing Law . This Agreement shall be governed by the laws of the State of Delaware, provided that nothing herein shall be construed in a manner inconsistent with the 1940 Act or the Advisers Act.

16.

Severability . If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby and, to this extent, the provisions of this Agreement shall be deemed to be severable.

17.

Notices . Notices of any kind to be given to the Trust hereunder by the Adviser shall be in writing and shall be duly given if mailed or delivered to:

Conestoga Funds

259 N. Radnor-Chester Road
Radnor Court, Suite 120
Radnor, PA 19087

Attention: William C. Martindale, Jr.

President

with a copy to:

Drinker Biddle Reath LLP

One Logan Square, Ste 2000

Philadelphia, PA 19103

Attention: Joshua B. Deringer, Esq.

or at such other address or to such individual as shall be so specified by the Trust to the Adviser. Notices of any kind to be given to the Adviser hereunder by the Trust shall be in writing and shall be duly given if mailed or delivered to the Adviser at:

Conestoga Capital Advisors, LLC

259 N. Radnor-Chester Road
Radnor Court, Suite 120
Radnor, PA 19087

Attention: Duane R. D’Orazio

Managing Partner

or at such other address or to such individual as shall be so specified by the Adviser to the Trust. Notices shall be effective upon delivery.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date written above.

SCHEDULE A

to the

INVESTMENT ADVISORY AGREEMENT

between

CONESTOGA FUNDS and CONESTOGA CAPITAL ADVISORS, LLC

Approved by the Board of Trustees: [__________ _], 2014

Appendix C

CONESTOGA FUNDS

DISTRIBUTION PLAN
for Investors Class Shares of the

Conestoga Small Cap Fund

WHEREAS, Conestoga Funds (the “Trust”) is engaged in business as an open-end investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS, the trustees of the Trust (the “Trustees”) have determined that there is a reasonable likelihood that the following Distribution Plan will benefit the Trust and the holders Investors Class Shares of the Conestoga Small Cap Fund (the “Fund”);

NOW, THEREFORE, the Trustees hereby adopt this Distribution Plan pursuant to Rule 12b-1 under the 1940 Act.

SECTION 1.

The Trust has adopted this Distribution Plan (the “Plan”) to enable the Fund to directly or indirectly bear expenses relating to the distribution of Investors Class Shares of the Fund.

SECTION 2.

The Fund will pay the distributor of Investors Class Shares of the Fund a fee at the annual rate of [up to 0.25%] of the Fund’s average daily net assets attributable to Investors Class Shares.  The distributor may retain all or part of this fee as compensation for distribution or shareholder services it provides or it may use such fees for compensation of broker/dealers and other financial institutions and intermediaries that provide distribution or shareholder services as specified by the distributor.  The actual fee to be paid by the distributor to broker/dealers and financial institutions and intermediaries will be negotiated based on the extent and quality of services provided.

SECTION 3.

This Plan shall not take effect until it has been approved (a) by a vote of at least a majority of the outstanding Investors Class Shares of the Fund; and (b) together with any related agreements, by votes of the majority of both (i) the Trustees and (ii) the Independent Trustees (as defined herein), cast in person at a meeting of the Trustees called for the purpose of voting on this Plan or such agreement.

SECTION 4.

This Plan shall continue in effect for a period of more than one year after it takes effect only for so long as such continuance is specifically approved at least annually in the manner provided in Part (b) of Section 3 herein for the approval of this Plan.

SECTION 5.

Any person authorized to direct the disposition of monies paid or payable by the Fund pursuant to this Plan or any related agreement shall provide to the Trustees, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made.

SECTION 6.

This Plan may be terminated at any time by the vote of a majority of the Independent Trustees or by vote of a majority of the outstanding Investors Class Shares of the Fund.

SECTION 7.

All agreements with any person relating to implementation of this Plan shall be in writing, and any agreement related to this Plan shall provide (a) that such agreement may be terminated at any time, without payment of any penalty, by the vote of a majority of the Independent Trustees or by vote of a majority of the outstanding Investors Class Shares of the Fund, on not more than 60 days written notice to any other party to the agreement; and (b) that such agreement shall terminate automatically in the event of its assignment.

SECTION 8.

This Plan may be amended in the manner provided in Part (b) of Section 3 herein for the approval of this Plan; provided, however, that the Plan may not be amended to increase materially the amount of distribution expenses permitted pursuant to Section 2 hereof without the approval of a majority of the outstanding Investors Class Shares of the Fund.

SECTION 9.

While this Plan is in effect, the selection and nomination of those Trustees who are not interested persons of the Trust shall be committed to the discretion of the Directors then in office who are not interested persons of the Company.

SECTION 10.

As used in this Plan, (a) the term “Independent Trustees” shall mean those Trustees who are not interested persons, and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it, and (b) the terms “assignment” and “interested person” shall have the respective meanings specified in the 1940 Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the Securities and Exchange Commission.

SECTION 11.

This Plan shall not obligate the Trust or any other party to enter into an agreement with any particular person.

Adopted:  ______________ __, 2014

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