Orion Capital Incorporated and Tengtu International Corp. - s. 144

Headnote

Partial revocation of cease trade order pursuant to section 144 of the Act granted to permit trades solely for the purpose of establishing a tax loss for income tax purposes, in accordance with OSC Policy 57-602.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 6(3), 127, 144.

Policies Cited

OSC Policy 57-602 Cease Trading Orders -- Applications of Partial Revocation to Permit a Securityholder to Establish a Tax Loss.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, CHAPTER S.5, AS AMENDED

(the Act)

AND

IN THE MATTER OF

ORION CAPITAL INCORPORATED

AND

TENGTU INTERNATIONAL CORP.

ORDER

(Section 144)

Background

1. The securities of Tengtu International Corporation ("Tengtu") are currently subject to a cease trade order of the Ontario Securities Commission (the "Commission") effective October 2, 2006 and extended effective October 13, 2006 pursuant section 127 of the Act (the "Cease Trade Order"), ordering that trading in and acquisitions of any securities of Tengtu cease.

2. Orion Capital Corporation ("Orion") has made an application to the Commission pursuant to section 144 of the Act (the "Application") for an order (the "Order") varying the Cease Trade Order to permit the sale by Orion of 16,708,475 common shares of Tengtu (the "Orion Shares") solely for the purpose of establishing a tax loss.

3. Ontario Securities Commission Policy 57-602 -- Cease Trading Orders -- Applications of Partial Revocation to Permit a Securityholder to Establish a Tax Loss provides that the Commission is prepared to vary an outstanding cease trade order to permit the disposition of securities subject to the cease trade order for the purposes of establishing a tax loss where the Commission is satisfied that the disposition is being made, so far as the securityholder is concerned, solely for the purpose of that securityholder establishing a tax loss and provided that the securityholder provides the purchaser with a copy of the cease trade order and the variation order.

Representations

4. Tengtu is a Delaware corporation formed on May 6, 1988.

5. Tengtu is a reporting issuer in Ontario only.

6. The authorized share capital of Tengtu consists of 150,000,000 common shares and 108,978,793 common shares were issued and outstanding on May 23, 2005.

7. The Cease Trade Order was made by the Commission for Tengtu's failure to file:

a) audited financial statements for the years ending June 30, 2005 and June 30, 2006;

b) management's discussion and analysis relating to the audited financial statements for the years ended June 30, 2005 and June 30, 2006;

c) interim financial statements for the three-month period ended September 30, 2005;

d) interim financial statements for the six-month period ended December 31, 2005; and

e) interim financial statements for the nine-month period ended March 31, 2006 (collectively, the "Financial Statements")

8. Orion is a private investment holding company incorporated in the province of Ontario by Articles of Amalgamation dated October 21, 1998.

9. Orion acquired the Orion Shares prior to the effective date of the Cease Trade Order.

10. There is a quoted market for the Orion Shares on the U.S. Pink Sheets but as a result of the Cease Trade Order and other factors, Orion has determined that there is no market for the Orion Shares and that they have no value.

11. Orion will effect the proposed trades of the Orion Shares (the "Disposition") solely for the purpose of enabling it to establish a tax loss in respect of such Disposition.

12. The purchasers of the Orion Shares are sophisticated purchasers and understand that the Orion Shares have no market value, the nature of the Cease Trade Order and the purpose of the proposed trade.

13. The purchasers have agreed to purchase the Orion Shares for a nominal combined purchase price of $4.00 (representing $1.00 per purchaser).

14. The purchasers will purchase and hold the Orion Shares as principal.

15. The purchasers have been provided with a copy of the Cease Trade Order and, prior to the completion of the Disposition, will be provided with a copy of this Order.

Order

16. The Commission is satisfied that granting this Order would not be prejudicial to the public interest.

17. It is ordered pursuant to section 144 of the Act that the Cease Trade Order is varied solely to permit the Disposition.

DATED November 7, 2006