Stellation Asset Management, LLC - s. 80

March 31, 2006

Order

Headnote

Section 80 of the Commodity Futures Act (Ontario) -- relief from the adviser registration requirements of subsection 22(1)(b) of the CFA granted to sub-adviser and underlying fund managers not ordinarily resident in Ontario in respect of advising certain funds, subject to certain terms and conditions. Relief mirrors exemption available in section 7.3 of OSC Rule 35-502 -- Non-Resident Advisers made under the Securities Act (Ontario).

Statutes Cited

Commodity Futures Act, R.S.O. 1990, c. C.20, as am., ss. 22(1)(b), 80.

Securities Act, R.S.O. 1990, c. S.5, as am. - Rule 35-502 - Non Resident Advisers.

IN THE MATTER OF

COMMODITY FUTURES ACT,

R.S.O. 1990 c. 20 (the CFA)

AND

IN THE MATTER OF

STELLATION ASSET MANAGEMENT LLC

ORDER

(Section 80)

UPON the application of Stellation Asset Management (the Applicant or Sub-Adviser) to the Ontario Securities Commission (the Commission) for an order pursuant to section 80 of the CFA that neither the Sub-Adviser nor any of its directors, officers or employees, acting on its behalf as an adviser (the Representatives), shall be subject to the adviser registration requirement in section 22(1)(b) of the CFA in respect of advice provided to Impax Funds Management Inc. (the Interim Principal Adviser) for the benefit of the Stellation Capital Fund Ltd. (the Fund), in respect of trades in commodity futures contracts and commodity futures options traded on commodity futures exchanges outside Canada and cleared through clearing houses outside Canada (the Commodity Futures);

AND FURTHER that neither the Underlying Managers (as defined below) nor any of their respective directors, officers or employees, acting on their behalf as an adviser (the Underlying Managers Representatives) shall be subject to the adviser registration requirement in section 22(1)(b) of the CFA in respect of advice provided to the Fund relating to Commodity Futures;

AND UPON considering the application and the recommendation of the staff of the Commission;

AND UPON the Sub-Adviser having represented to the Commission that:

1. The Sub-Adviser is a limited liability company formed under the laws of the State of Delaware in the United States. The head office of the Sub-Adviser is in New York, New York.

2. The Sub-Adviser is currently registered as an investment adviser with the U.S. Securities and Exchange Commission (under the 120 day approval rule). The Sub-Adviser has applied for registration under the Securities Act (Ontario) (OSA) as an international adviser in the category of investment counsel and portfolio manager, and as a dealer in the category of non-resident limited market dealer.

3. Until the Sub-Adviser is registered under the OSA it intends to rely upon an exemption from the OSA registration requirements pursuant to section 7.3 of Ontario Securities Commission Rule 35-502 -- Non Resident Advisers (Rule 35-502). There is presently no rule under the CFA that provides an exemption from the adviser registration requirement in section 22(1)(b) of the CFA, for a person or company acting as an sub-adviser to another registered adviser in respect of commodity futures options and commodity futures contracts that is similar to the exemption from the adviser registration requirement in clause 25(1)(b) of the Securities Act (Ontario) available in section 7.3 of Rule 35-502.

4. The Interim Principal Adviser is registered under the OSA as an adviser in the categories of investment counsel and portfolio manager. The Interim Principal Adviser is not currently registered under the CFA and will rely on an exemption in section 31(d) of the CFA from the registration requirements in section 22(1)(b) of the CFA.

5. The Fund is an exempted company formed under the laws of the Cayman Islands. The Fund is a fund of funds that will allocate its assets among a select group of hedge funds (the Underlying Funds) managed by investment managers that are unrelated to the Applicant (the Underlying Managers).

6. Although the Fund will initially be offered primarily in Canada, it is expected to also be offered in the British Virgin Islands, the Channel Islands, Sweden and England. It is currently intended that, in the long term, the Fund will be offered primarily abroad.

7. The Sub-Adviser will be responsible for the day-to-day investment management services in respect of the Fund, subject to the supervision of the Interim Principal Adviser, pursuant to the terms of a portfolio advisory agreement (the Portfolio Advisory Agreement).

8. Under the terms of the Portfolio Advisory Agreement, the Sub-Adviser will agree to:

(a) exercise its powers and discharge its duties honestly, in good faith, and in the best interests of the Fund and its securityholders; and

(b) exercise the degree of care, diligence and skill that a reasonably prudent portfolio manager would exercise in the circumstances;

(together, the Standard of Care).

9. The Interim Principal Adviser has agreed to be responsible for the investment advice given or the portfolio management services provided by the Sub-Adviser and will be responsible to the Fund for any loss that arises out of the failure of the Sub-Adviser to discharge its obligations under the Portfolio Advisory Agreement in accordance with the Standard of Care.

10. At the time the Sub-Adviser becomes registered under the OSA as an advisor, the appointment of the Interim Principal Adviser will be terminated and the Applicant will contract directly with the Fund to act as its investment manager. At that time, the Applicant will rely on the exemption in section 31(d) of the CFA from the registration requirements in section 22(1)(b) of the CFA.

11. The offering documents of the Fund will disclose that:

(a) the Interim Principal Adviser has responsibility for the investment advice and portfolio management services provided by the Sub-Adviser; and

(b) to the extent applicable, there may be difficulty in enforcing any legal rights against the Fund because it is resident outside of Canada and all or substantially all of its assets are situated outside of Canada.

AND UPON being satisfied that it would not be prejudicial to the public interest for the Commission to grant the exemptions requested on the basis of the terms and conditions proposed,

IT IS ORDERED, pursuant to section 80 of the CFA that neither the Sub-Adviser or any of its Representatives are subject to the requirements of section 22(1)(b) of the CFA, in respect of their investment advice and portfolio management services for the benefit of the Fund (the Sub-Adviser Relief), provided that:

(a) the duties and obligations of the Sub-Adviser are set out in a written agreement with the Interim Principal Adviser;

(b) the Interim Principal Adviser has contractually agreed with the Fund to be responsible for any loss that arises out of the failure of the Sub-Adviser to:

(i) exercise its powers and discharge its duties honestly, in good faith and in the best interests of the Fund and its securityholders; and

(ii) exercise the degree of care, diligence and skill that a reasonably prudent portfolio manager would exercise in the circumstances;

(c) the Interim Principal Adviser cannot be relieved by the Fund or its securityholders of its responsibility for loss under paragraph (b) above;

(d) the Sub-Adviser is registered as an investment adviser with the U.S. Securities and Exchange Commission;

(e) the Interim Principal Adviser is registered under the OSA as an adviser in the categories of investment counsel and portfolio manager;

(f) the Interim Principal Adviser and the Sub-Adviser ensure that no more than 5% of the Fund's assets will be invested in Underlying Funds that purchase or sell Commodity Futures;

(g) the securityholders of the Fund have received written disclosure in the offering documents of the Fund, disclosing:

(i) the responsibility of the Interim Principal Adviser for losses arising out of any failure of the Sub-Adviser referred in paragraph (b), above, and

(ii) that there may be difficulty in enforcing legal rights against the Fund because it is resident outside Canada and all or substantially all of the Fund's assets may be situated outside of Canada.

IT IS FURTHER ORDERED that upon the registration of the Sub-Adviser as an international adviser under the OSA and the termination of the appointment of the Interim Principal Adviser, the Sub-Adviser Relief shall expire;

AND IT IS FURTHER ORDERED that neither the Underlying Managers or the Underlying Managers Representatives are subject to the requirements of section 22(1)(b) of the CFA, in respect of their advisory activities in connection with the Underlying Funds and the Fund, provided that:

(a) the Underlying Fund Managers and the Underlying Managers Representatives are registered, or exempt from registration, with the U.S. Commodity Futures Trading Commission or a similar regulatory authority in their home jurisdiction; and

(b) no more than 5% of the Fund's assets will be invested in Underlying Funds that purchase or sell Commodity Futures unless the Applicant obtains registration as a Commodity Trading Manager under the CFA.

AND IT IS FURTHER ORDERED that this Order shall terminate on the day that is three years after the date of the Order.

March 31, 2006

"Robert L. Shirriff"

"Carol S. Perry"