Destination Resorts Inc. - MRRS Decision

Headnote

MutualReliance Review System for Exemptive Relief Applications - corporationhaving only three registered shareholders and no non-registeredshareholders relieved from the requirements of National Policy41 under specific conditions.

ApplicableStatutory Provisions

NationalPolicy Statement 41, Parts XI and XII.

INTHE MATTER OF

THESECURITIES LEGISLATION

OFALBERTA, BRITISH COLUMBIA, SASKATCHEWAN,

MANITOBA,ONTARIO AND QUÉBEC

AND

INTHE MATTER OF

THEMUTUAL RELIANCE REVIEW SYSTEM

FOREXEMPTIVE RELIEF APPLICATIONS

AND

INTHE MATTER OF DESTINATION RESORTS INC.

MRRSDECISION DOCUMENT

1.WHEREAS the local securities regulatory authorityor regulator (the "Decision Maker") in Alberta, British Columbia,Manitoba, Saskatchewan, Ontario and Québec (the "Jurisdictions")has received an application from Destination Resorts Inc. ("DRI")for a decision under the securities legislation of each of theJurisdictions (the "Legislation") that the requirements of NationalPolicy Statement No. 41 ("NP 41") shall not apply to DRI;

2.AND WHEREAS under the Mutual Reliance ReviewSystem for Exemptive Relief Applications (the "System") theAlberta Securities Commission is the principal regulator forthis application;

3.AND WHEREAS DRI has represented to the DecisionMakers that:

3.1 DRI was incorporated under the Business CorporationsAct (Alberta) (the "ABCA") on December 5, 1996;

3.2 DRI is a reporting issuer, or the equivalent, in the Jurisdictions;

3.3 T.G.S. Properties Ltd. ("TGS") acquired all of the issuedand outstanding common shares of DRI under an insider bid andcompulsory acquisition transaction which concluded on November22, 2000;

3.4 Airstate Ltd. ("Airstate") and United Ltd. ("United") becameholders of DRI Shares on January 15, 2001 by way of privateplacements;

3.5 TGS, Airstate and United (the "DRI Shareholders") are theonly registered holders of common shares of DRI;

3.6 there are no non-registered holders of securities of DRI;

3.7 DRI's common shares were delisted from The Toronto StockExchange (the "TSE") on November 30, 2000;

3.8 the DRI Shareholders entered into a Unanimous Shareholders'Agreement ("USA") on January 15, 2001;

3.9 pursuant to the USA, the DRI Shareholders must agree ona number of matters including, but not limited to:

3.9.1 advances by the DRI Shareholders to DRI and any guaranteesto be granted by the DRI Shareholders;

3.9.2 the number of directors of DRI (the "Directors"), thecomposition of the Board of Directors and the removal of Directors;

3.9.3 remuneration of Directors;

3.9.4 the declaration and payment of dividends;

3.9.5 the issuance and allotment of additional securities ofDRI; and

3.9.6 certain fundamental changes;

3.10 meetings of the DRI Shareholders may be held from timeto time to consider items referenced in subparagraph 3.9 above;

3.11 the USA also contemplates that the Directors may call aspecial meeting of the DRI Shareholders at any time;

3.12 DRI has outstanding $10,414,000 principal amount 8% convertibleredeemable debentures (the "DRI Debentures") which mature onJune 30, 2002 and are currently listed on theTSE.

3.13 under the terms of the Trust Indenture governing the DRIDebentures (the "Trust Indenture"), DRI must remain a reportingissuer until the DRI Debentures mature;

3.14 under the terms of the Trust Indenture, holders of theDRI Debentures are not entitled to notice of or to attend meetingsof DRI Shareholders;

3.15 the DRI Debentures are convertible into common shares ofDRI upon notice of conversion to DRI;

3.16 DRI does not expect that any DRI Debentures will be convertedinto common shares of DRI prior to the maturity of the DRI Debenturesdue to the high conversion price and illiquidity of DRI's commonshares;

3.17 other than debt owed to three third-party lenders and financialinstitutions, DRI has no securities, including debt securities,issued and outstanding save for:

3.17.1 the DRI common shares held by TGS, Airstate and United;

3.17.2 the DRI Debentures;

3.17.3 options to acquire an aggregate of 235,294 common sharesof DRI held by two consultants resident in British Columbiawhich expire January 16, 2003;

3.17.4 an option to acquire 3,500 common shares of DRI heldby an employee resident in Alberta which expires October 17,2002; and

3.17.5 an option to acquire 7,806,405 common shares of DRI heldby TGS which expires January 14, 2006;

3.18 DRI will comply with the requirements of the ABCA regardingthe holding of shareholders meetings and will either hold ameeting or obtain a written resolution of DRI Shareholders inlieu of a meeting;

4.AND WHEREAS under the System, this MRRS DecisionDocument evidences the decision of each Decision Maker (collectively,the "Decision");

5.AND WHEREAS each of the Decision Makers issatisfied that the test contained in the Legislation that providesthe Decision Maker with the jurisdiction to make the Decisionhas been met;

6.THE DECISION of the Decision Makers under theLegislation is that the requirements of NP 41 shall not applyto DRI provided that this Decision shall cease to be effectiveupon the earlier of the occurrence of any event which resultsin:

6.1 any outstanding voting securities of DRI being held by non-registeredholders; or

6.2 DRI ceasing to be a reporting issuer, or the equivalent,in the Jurisdictions.

January11, 2002.

"EricT. Spink, Vice-Chair"       "Jerry A. Bennis,FCA, Member"