Securities Law & Instruments

Headnote

Approval granted for change of manager from Covington Group of Funds Inc. to Impax Funds Management Inc.

Rules Cited

National Instrument 81-102 Mutual Funds, s. 5.5(1)(a).

November 15, 2005

Gowling Lafleur Henderson LLP

Attention: Angela Nikolakakos

Dear Sirs/Mesdames:

RE:
Venture Partners Equity Fund Inc.
Application pursuant to subsection 5.5 (1)(a) of National Instrument 81-102 for Approval of Change of Manager

By letter dated August 11, 2005 and subsequent submissions (the "Application"), you applied on behalf of Venture Partners Equity Fund Inc. (the "Fund") and Covington Group of Funds Inc. (the "Current Manager") for approval pursuant to subsection 5.5 (1)(a) of National Instrument 81-102 -- Mutual Funds ("NI 81-102") for a proposed change of the manager of the Fund.

In the Application, the Fund represented the following:

1. The Fund is a corporation incorporated under the Business Corporations Act (Ontario) by Articles of Incorporation dated November 1, 2002, which were subsequently amended by Articles of Amendment dated December 18, 2003. The Fund's head office is located in Ontario.

2. The Fund is registered as a labour sponsored investment fund corporation under the Community Small Business Investment Funds Act (Ontario) and is a prescribed labour-sponsored venture capital corporation under the Income Tax Act (Canada), as amended.

3. Two series of Class A Shares, Class A Shares, series II and Class A Shares, series III, in the capital of the Fund are currently qualified for distribution in the Province of Ontario pursuant to a prospectus dated December 24, 2004 and amended by Amendment No.1 on September 12, 2005 (the "Prospectus"), which Prospectus has been filed and for which a receipt was obtained. The Fund is a mutual fund as defined in subsection 1(1) of the Securities Act (Ontario).

4. As of the date hereof, the Current Manager has been retained by the Fund to perform daily administrative operations and to engage and supervise service providers of the Fund pursuant to an amended and restated management agreement dated December 26, 2003, entered into by the Current Manager and the Fund (the "Management Agreement").

5. The Current Manager is a wholly owned subsidiary of Triax Capital Corporation which is a wholly owned subsidiary of AMG Canada Corp. (formerly First Asset Management Inc.) ("AMG Canada"). AMG Canada is a wholly owned subsidiary of Affiliated Managers Group, Inc. a U.S. based asset management company.

6. The Current Manager has retained First Asset Investment Management Inc. (the "Investment Advisor") to assist it to develop and refine the investment strategy and criteria of the Fund, to execute all investment decisions and to supervise the activities of the Investment Specialists (as defined below), all pursuant to an investment advisory agreement dated December 18, 2002 made between the Fund, the Current Manager and the Investment Advisor (the "Investment Advisory Agreement"). Pursuant to other agreements, the Investment Advisor, in turn, has retained Covington Life Sciences Corporation, Covington Capital Corporation and Quantum Leap Asset Management Limited (collectively, the "Investment Specialists") to assist it to develop and refine the investment strategy and criteria of the Fund and to assist the Fund with the implementation of the investment strategy by identifying, structuring and monitoring all investments of the net proceeds allocated to each of the Investment Specialists.

7. On April 15, 2005, Gordon A. McMillan, one of the principals of the New Manager (as defined below) was granted an option (the "Option") by AMG Canada to purchase all of the Current Manager's right, title and interest in and to the Management Agreement (the "Transaction"). On May 31, 2005, Gordon A. McMillan assigned this option to Impax Funds Management Inc. (the "New Manager") and the New Manager provided notice to AMG Canada on May 31, 2005 that it wished to exercise the Option.

8. Pursuant to the terms of the Management Agreement, the Current Manager can only assign the Management Agreement to a third party with the written consent of the Fund. On July 26, 2005, the board of directors of the Fund passed a resolution consenting to the assignment of the Management Agreement, which consent is conditional upon the appointment of an investment counsel and portfolio manager acceptable to the Fund.

9. The New Manager has advised the Fund and the Current Manager that it will seek to replace the Investment Advisor with another investment counsel and portfolio manager. The New Manager is currently interviewing various parties and anticipates appointing a new investment advisor concurrently with the completion of the Transaction.

10. The Fund held a special meeting of shareholders on August 23, 2005 at which the shareholders of the Fund approved the change of manager.

11. The individuals who will be running the New Manager after the completion of the Transaction have considerable collective and individual experience in running similar companies. These persons have the integrity, experience and competence to perform their duties with respect to the Fund.

12. The Current Manager has no reason to believe that the change in manager of the Fund will have any adverse effect on the management and administration of the Fund. The Fund's administrative procedures will remain in place as the New Manager expects to maintain the current arrangements with the Fund's current custodian and registrar and transfer agent. The Investment Advisor that currently performs those functions under the Investment Advisory Agreement has also indicated that they will continue to do so until a change is made and is willing to assist the New Manager with the transition of the management of the Fund.

This letter confirms that, based on the information and representations contained in the Application, and for the purposes described in the Application, the change of the manager of the Fund to Impax Funds Management Inc. is hereby approved.

The approval provided herein is subject to compliance with all applicable provisions of NI 81-102.

"Leslie Byberg"
Manager, Investment Funds