Class E conversion

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Rationale

Class E Investment Shares have never been issued. The intention of their creation was to establish ownership of EcoReality Co-op's biodiesel production infrastructure, so that the biodiesel produced could be received by its rightful owners, the Class E Investment Shareholders, without undue regulatory concern.

Part of our recruiting strategy is a stepped commitment, whereby potential member-funders would put small amounts of funds into EcoReality Co-op, until they felt ready to commit to a full share. It seemed like an unused class of investment shares could be used for that purpose.

Recent legal action has raised the possibility that the co-op could be involuntarily liquidated, in which case, potential member-funders who subscribed to Class A Investment Shares could lose part of their investment.

Class E Investment Shares have a 90-day redemption period, and Class A Investment Shares have a $10,000 minimum. Thus, potential member-funders could periodically put amounts as small as $1 into Class E Investment Shares, and after they had reached 10,000 shares and become more familiar and comfortable with the co-op, they could request that their Class E Investment Shares be converted to Class A Investment Shares, at par value.

Conversely, if they decided co-op life was not for them, they could request redemption of their Class E Investment Shares, and receive full payout in 90 days.

Class E Investment shares, no matter how many are purchased, do not carry any particular privilege. Holders of Class E Investment Shares must request conversion to Class A Investment Shares — and share the risk of such ownership with other member-funders — before being allowed permanent residence and the right to build a dwelling.

Current Wording

(Rule 21)

  1. Membership shares: (no change)
  2. Class A shares: (see see current wording)
  3. Class B shares: (see see current wording)
  4. Class C shares: (no change)
  5. Class D shares: (no change)
  6. Class E shares:
    1. have a par value of $1 per share;
    2. may be purchased by members or non-members with the approval of the directors;
    3. may be held jointly;
    4. do not bear interest nor dividend;
    5. may be transferred with the approval of the Directors;
    6. can be redeemed at par value;
    7. require a 90-day redemption notice;
    8. upon dissolution, will be redeemed after Class D investment shares, but prior to redemption of membership shares.

Proposed Wording

No changes to Rule 21 are necessary.

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