PREFERRED SHARES INFORMATION

Preferred Shareholders are investing locally, know how their money is being used, and have a direct say regarding major decisions through their vote as member-owners. The Co-op will have the benefit of using the funds to build a community-owned grocery store and gathering space that provides nutrient- dense food, local and regional foods from local farmers, clean conventional food, competitive wage jobs with benefits, and a community gathering space with cooperative education and civic engagement training. The co-op’s earnings will be recirculated in our community instead of being siphoned off to benefit distant investors.

We have prepared a plan that includes building construction, stocking inventory, hiring, training, and paying staff to run our new cooperative grocery store. These are clearly outlined in the Sources and Uses section of the Offering Memorandum. The amount we seek will allow us to move forward with our plan, have sufficient cash reserves with a strong financial position to successfully open and maintain our food cooperative which is prudent business practice.

No. A cooperative is an economic democracy, with each member having a say and one vote in its governance. Investing in Preferred Shares does not give any member additional votes or power in the cooperative.

‍

Every business investment – from Main Street to Wall Street – takes on the risks inherent to the business, including the possibility that the business will fail and the investor will lose all of the money invested. People start businesses with the goal to succeed and work very hard to ensure the enterprise will prosper and thrive. The members and board of Fertile Ground are creating a store and gathering place for many generations to come. They will continue to work very hard to manage the co-op as a business and lead it to long-term success. This means understanding business risks and operating to reduce them.

‍

With that in mind, you should only invest in Fertile Ground’s Preferred Shares if you can afford to lose all of your money and if you can wait ten/eleven years to redeem (be repaid) your investment. This offering is a long-term investment. The different risks the Board and others have identified that will challenge the Fertile Ground grocery store in the coming years are described in greater detail in the Offering Memorandum. You should read that carefully to understand the nature of the business risk you are investing in and the steps that Fertile Ground is taking to lead the grocery to success.

Members investing in Preferred Shares may choose a dividend rate between 0.0% and 3.0%. As noted above, dividends accrue at the chosen rate of return, but may only be paid out to investors when the Board determines payments will not harm the co-op’s operation. The first year's interest will be prorated on the date of issuance.

The Preferred Share offering has a term of ten (10) years (until 2034), by which time all Preferred Shares should be redeemed (repurchased) by the Cooperative. However, dividend payments and share repurchases may only take place if payment will not place the Cooperative in financial jeopardy. Fertile Ground’s board has the discretion to defer Preferred Share payments until the Co-op has sufficient cash flow to do so and maintain liquidity.

Fertile Ground is legally organized as a Cooperative Association, a special type of corporation. Corporations are owned by their investors in the form of shares, equal units of ownership. Each basic corporation share, or Common Share, represents a right to receive profits from the corporation and to vote for the board of directors that manages the business. In a cooperative, each member owns one share only. Instead of a right to future profits, a cooperative member has a right to obtain the non-financial benefit that the co-op provides: shopping for good food, participating in programs, etc. Each co-op member has only one share, and with it one vote in the governance of the cooperative. Economic democracy – one member, one share, one vote – is one of the fundamental principles that define a cooperative.

‍

A Preferred Share is a special kind of corporation share for raising additional financial capital from investors. It is a share of ownership, like a Common Share, but does not carry the rights of a Common Share. In particular:

• A co-op member can own several Preferred Shares, as opposed to only one Common Share.
• Preferred Shares have no vote in the governance of the cooperative.
• Preferred shares pay dividends, a financial return on investment. Preferred Shares have a “preference” in payment; they have a right to be paid dividends before any operating surplus is returned to members.
• Preferred Shares also have a preference in receiving distribution of assets upon dissolution of the Cooperative.
• These dividends accrue at a fixed rate of interest. Preferred Shares can be repurchased or“redeemed” for by the cooperative after a fixed term of years.

If you are interested in investing in Preferred Shares, you should first obtain a copy of Fertile Ground’s Offering Memorandum, a document that provides detailed background on the Co-op’s plans, its financial history, and its financial projections. Reading the Offering Memorandum will allow you to determine if making an investment in these shares is appropriate for you.

To request a copy of the Offering Memorandum, or to ask other questions, email info@fertileground.coop.

We are offering a total of 1500 shares at a cost of $1,000.00 per share. A co-op member could buy just one share or as many as 1500 shares (or as many shares as are available). No partial shares are available (e.g., no one can purchase a 1⁄2 share for $500). We can sell no more than 1500 shares in total.

There are two requirements for a member to purchase preferred shares:

1. You must be a Fertile Ground Food Cooperative member-owner.
2. You must be a North Carolina resident at the time of purchase.

If you meet these two requirements, you must obtain a copy of the Offering Memorandum and read it thoroughly. If at that point you wish to purchase Preferred Shares, an authorized Board member will provide you with a purchase contract, or Subscription Agreement. You will sign the subscription agreement and pay the share purchase amount at that time. (Under certain circumstances you can pay the share purchase amount over time, in six monthly installments.)

Please contact info@fertileground.coop to request an Offering Memorandum to determine whether you would like to invest.

‍