Securities Law & Instruments

Headnote

Application for relief from registration andprospectus requirements in connection with issuance of certainsecurities of agricultural co-operative to Ontario members ofco-operative -- securities acquired for a business purpose andnot with investment intent -- relief granted subject to conditions-- first trade of securities issued in reliance upon the orderto a person or company who is not the issuer or an Ontario Memberdeemed to be a distribution.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. (1)(1), 25, 53, 74(1)

Regulations Cited

Regulation made under the Securities Act, R.R.O.1990, Reg. 1015, as am.

IN THE MATTER OF
THE SECURITIES ACT, R.S.O. 1990, c. S.5,
AS AMENDED (THE "ACT")

AND

IN THE MATTER OF
GROWMARK, INC.

ORDER
(Subsection 74(1))

WHEREAS the Commission has previouslyissued an order (the "Old Order"), dated July 28,2000, pursuant to subsection 74(1) of the Act in connectionwith a previous reorganization of the share capital of GROWMARK;

AND WHEREAS GROWMARK is proposing againto reorganize its share capital, which reorganization (the "Reorganization")will include the issuance to member co-operatives resident inOntario ("Ontario Members") of one share of ClassD Preferred Stock upon the conversion of each share of ClassD Preferred Stock, Series A currently held by Ontario Members.

AND WHEREAS GROWMARK, in connection withthe Reorganization, is applying to the Commission for an order(the "New Order") pursuant to subsection 74(1) ofthe Act that the following transactions will not be subjectto sections 25 and 53 of the Act:

(a) the issuance to Ontario Members of one shareof Class D Preferred Stock upon the conversion of each shareof Class D Preferred Stock, Series A currently held by suchOntario Members; and

(b) subsequent Patronage Distributions (as definedbelow) by GROWMARK to Ontario Members of shares of Class D PreferredStock or other securities, similar in all material respectsto the Class D Preferred Stock;

AND UPON considering the applicationand recommendation of the staff of the Commission;

AND UPON it being represented by GROWMARKto the Commission that:

1. GROWMARK is a corporation which was incorporatedunder the laws of Delaware under the name "FS ServicesInc." in 1962. In 1980, its name was changed to "GROWMARK,Inc.". GROWMARK operates on a co-operative basis, carryingon business as a federated agricultural co-operative, primarilyin Illinois, Wisconsin and Iowa. In addition, although GROWMARKis not a resident of Canada, it carries on business on a co-operativebasis in Ontario;

2. The member companies of GROWMARK consistof approximately 290 agricultural co-operatives located primarilyin Illinois, Wisconsin, Iowa and Ontario. There are approximately29 Ontario Members, each of which is incorporated under theCo-operative Corporations Act (Ontario), R.S.O. 1990, c. C.35;

3. GROWMARK is not a reporting issuer in Ontarioor in any other province or territory of Canada and has no presentintention of becoming a reporting issuer in any jurisdiction;

4. Currently, the total number of shares ofall classes of stock which GROWMARK has the authority to issueis 5,471,500 shares, consisting of four classes of PreferredStock, one of which is divided into series, and one class ofCommon Stock;

5. A share of Common Stock evidences membershipin GROWMARK. Holders of such shares have no rights to vote,no rights to dividends and no preferences on liquidation, dissolutionor winding up but are eligible to receive annual distributions("Patronage Distributions") on the basis of theirpatronage with GROWMARK during the year. The amount of any suchPatronage Distributions is equal to the net earnings of GROWMARKfor the year, after setting aside sufficient funds to pay anypreferred share dividends and such reasonable reserves and surplusfunds as the Board of Directors determines to be necessary forGROWMARK's business. Upon any liquidation, dissolution or windingup of GROWMARK, holders of Common Stock are entitled to theassets remaining after payment of all indebtedness and otheramounts owed to the holders of preferred stock, on the basisof prior patronage with GROWMARK. Shares of Common Stock wouldbe redeemed automatically upon any termination of a holder'smembership in GROWMARK, without any payment to the holder.

6. The only shares of GROWMARK currently heldby the Ontario Members are shares of Common Stock and of ClassD Preferred Stock, Series A;

7. The Reorganization provides for the streamliningof the share capital of GROWMARK (through the consolidationof the Class D Preferred Stock, Series A and the Class D PreferredStock, Series G) and certain changes to the corporation's governanceprocess relating to the election of directors.

8. The Reorganization will be effected by thefiling of a Restated Certificate of Incorporation of GROWMARKwith the Delaware Secretary of State. Upon such filing, eachoutstanding share of Class D Preferred Stock, Series A and ClassD Preferred Stock, Series G will be converted or otherwise treatedas follows:

(a) each share of Class D Preferred Stock, SeriesA, par value US$100 per share, will be converted into 1 shareof Class D Preferred Stock, par value US$100 per share; and

(b) each share of Class D Preferred Stock, SeriesG, par value US$100 per share, will be converted into 1 shareof Class D Preferred Stock, par value US$100 per share;

9. Following completion of the Reorganization,the total number of shares of all classes of stock which GROWMARKwill have the authority to issue will be 5,471,500 shares, consistingof 2,000,000 shares of Class B Preferred Stock (US$.15 par valueper share), 20,000 shares of Class C Preferred Stock (US$100par value per share), 3,150,000 shares of Class D PreferredStock (US$100 par value per share), 300,000 shares of ClassF Preferred Stock (US$25 par value per share) and 1,500 sharesof Common Stock (no par value per share);

10. Holders of Class D Preferred Stock willbe entitled to one vote per share at any meeting of the stockholdersof GROWMARK and to receive payment of the par value of suchshares upon liquidation, dissolution or winding-up of GROWMARK,subject to the rights of holders of Class B Preferred Stockand Class C Preferred Stock. No dividends or distributions ofearnings, either capital or patronage, will be payable to holdersof shares of Class D Preferred Stock. The shares are not generallytransferred or distributed by the holders; rather they are helduntil redemption for their par value by GROWMARK;

11. The attributes described above attachingto the Class D Preferred Stock are substantially similar tothose which currently attach to the Class D Preferred Stock,Series A, subject to the following differences:

(a) the size of the Board of Directors of GROWMARK(and the number of directors elected by a vote of the stockholdersof GROWMARK entitled to vote therefor, including the holdersof Class D Preferred Stock) will be reduced from 24 membersto 16 members; and

(b) the current right of the holders of ClassD Preferred Stock, Series A (i.e., Ontario Members) to approve,voting as a separate class, amendments to the provisions ofthe by-laws of GROWMARK that relate to the qualifications ofcertain directors, nomination of certain directors and make-upof the geographic zones and districts from which certain directorscan be elected, will be deleted;

12. The member stockholders of GROWMARK willbe asked to approve the Reorganization at a meeting to be heldon June 14, 2002. Approval of the Reorganization requires theaffirmative vote of the holders of a majority of:

(a) all outstanding voting stock;

(b) the Class D Preferred Stock, Series A; and

(c) the Class D Preferred Stock, Series G;

AND UPON the Commission being satisfiedthat to do so would not be prejudicial to the public interest;

IT IS ORDERED pursuant to subsection74(1) of the Act that the following transactions will not besubject to sections 25 and 53 of the Act:

(a) in connection with the Reorganization, theissuance to Ontario Members of one share of Class D PreferredStock upon the conversion of each share of Class D PreferredStock, Series A currently held by such Ontario Members; and

(b) subsequent Patronage Distributions by GROWMARKto Ontario Members of shares of Class D Preferred Stock or othersecurities, similar in all material respects to the Class DPreferred Stock, issued in satisfaction of such Patronage Distributions;

provided that:

(i) in connection with the completion of theReorganization, GROWMARK will send to each Ontario Member acopy of the New Order and a statement to the effect that asa result of the New Order certain protections, rights and remediesprovided by the Act, including statutory rights of rescissionor damages, will not be available to Ontario Members;

(ii) GROWMARK will prepare and send annuallyto each Ontario Member GROWMARK's annual report containing auditedfinancial statements and quarterly unaudited financial statementsat the same time as such statements are provided to membersof GROWMARK resident in the United States;

(iii) the exemptions contained in the New Orderwill cease to be effective if any of the restrictions on transferof the Common Stock and Class D Preferred Stock contained inthe subscription agreements entered into by Ontario Members,Restated Certificate of Incorporation or Restated By-laws areamended in any material respect without written notice to andconsent of the Commission; and

(iv) the first trade of any shares issued inreliance upon the New Order to a person or company who is noteither GROWMARK or an Ontario Member will be deemed to be adistribution of such shares within the meaning of the Act.

May 28, 2002.

"Paul M. Moore"      "Robert L. Shirriff"