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Fredericksburg Food Cooperative, Inc.

ARTICLE I: Organization, Ownership and Purpose

1.1 Organization. Fredericksburg Food Cooperative, Inc. has been organized as a cooperative  stock corporation (the “Cooperative”) under the laws of the Commonwealth of Virginia.

1.2 Ownership and Purpose. The Cooperative shall be owned by its members, hereinafter called  owners, and shall operate on the cooperative plan for their mutual benefit,, and is formed for the  purpose of conducting a full service grocery store and other purposes that are lawful under  Article 1, Chapter 3, Title 13.1, of the Code of Virginia (Cooperative Associations). Without  limiting the generality of the foregoing, the Cooperative’s purposes include:

(1) To establish and operate a full-service grocery store for the benefit of its owners and patrons  in and around Fredericksburg, Virginia, and the surrounding communities;

(2) To offer owners and patrons access to a wide range of natural, organic, and plant-based  products, with a special emphasis on locally grown and sourced foods;

(3) To provide information and education about health and sound nutrition, including the value  of consuming primarily plant-based foods;

(4) To support the local agricultural and food system by offering a reliable, year-round wholesale  buyer for locally produced goods;

(5) To cooperate with local civic and charitable organizations to address the needs of at risk and  low income populations;

(6) To implement the most sustainable practices in every aspect of our operations, and to partner  with others to encourage and support positive environmental principles;

(7) To be more than just another place to shop, but also include and welcome people of all  backgrounds to gather and share ideas for the betterment of our community;

(8) To inform our owners and prospective owners about the principles, practices, and benefits of  cooperative enterprises; and

(9) To undertake any other activities consistent with the above purposes and permitted by the  Code.

ARTICLE II: Ownership

2.1 Eligibility. Ownership in the Cooperative shall be open to any household of one or more  people residing together, and any entity including but not limited to businesses, non-profits, and governmental agencies who are in accord with its purposes, and willing to accept the  responsibilities of ownership.

2.2 Nondiscrimination. Ownership shall be open without regard to any characteristic that does  not directly pertain to a person’s eligibility.

2.3 Admission. Any eligible person may be admitted as an owner upon submitting an application  and investing equity in an amount and on such terms as determined by the Board of Directors  (henceforth “the Board”). Households and entities shall name an individual or individuals as  authorized representatives of the owner according to policies adopted by the Board.

2.4 General Rights. Owners have the right to elect the Cooperative’s Board, to attend meetings of  the Board, except those that are closed for confidentiality reasons, to receive notice of and attend  owners meetings, to petition as described in these bylaws, and to approve amendments to these  bylaws. Each owner shall have one vote and no more on all matters submitted to owners. The  rights of owners shall be understood to apply only to active owners in good standing. All rights  and responsibilities of owners are subject to the bylaws as they may be amended from time to  time, and to policies and decisions of the Cooperative or the Board.

2.5 Owner Preferences. Owners shall have the right to express their preferences regarding  product selection. This shall include, but not be limited to whether the Cooperative will offer  non-vegetarian products for sale. The Board and management shall establish processes, including  owner committees or conducting surveys to determine the product selection preferences of the  membership prior to opening a store and periodically thereafter.

2.6 Responsibilities. Owners shall keep the Cooperative informed of any changes in name or  current address and shall abide by these bylaws and the policies and decisions of the Cooperative  or the Board. An owner who upholds these responsibilities is considered an active owner in good  standing.

2.7 Termination of Ownership. An owner may terminate his or her ownership voluntarily at any  time by written notice to the Cooperative. Ownership may be terminated involuntarily by the  Board for cause after the owner is provided fair notice of the reasons for proposed termination  and has an opportunity to respond in person or in writing. Cause may include intentional or  repeated violation of any provision of the Cooperative’s bylaws or policies, actions that will  impede the Cooperative from accomplishing its purposes, actions or threats that adversely affect  the interests of the Cooperative or its members, willful obstruction of any lawful purpose or  activity of the Cooperative, or breach of any contract with the Cooperative.

2.8 Return of Equity. Equity shall be returned upon termination of ownership in the Cooperative,  under terms determined by the Board, provided that the Board has determined that the equity is  no longer necessary.

2.9 Unclaimed Property. If an owner does not have a current address on file with the Cooperative  for a period of 3 consecutive years, and the Cooperative publishes conspicuous notice as required  by § 13.1-322 of the Va. Code, and the owner or his or her heirs do not claim owner equity within 180 days of publication, such owner’s equity and patronage refunds and other rights shall  be transferred by forfeiture to the Cooperative.

2.10 Non-transferability: Ownership rights and owner equity may not be transferred in any  manner.

ARTICLE III: Owner Meetings

3.1 Annual Meeting. An owner meeting shall be held each year at a time and place to be  determined by the Board. The purpose of such meetings shall be to hear reports on operations  and finances, to review issues that vitally affect the Cooperative, and to transact such other  business as may properly come before the meeting.

3.2 Special Meetings. Special meetings of the owners may be called by the Board, either by  decision of the Board or in response to a written petition of 10% of the active owners. Notice of  special meetings shall be issued to owners. In the case of a petition, notice of the special meeting  will be issued within ten (10) days after a presentation of the petition to the Board. No business  shall be conducted at that special meeting except that specified in the notice of meeting.

3.3 Notice of meetings. Notice of the date, time, place and purpose of each meeting of the  owners shall be communicated to owners. In the case of meetings where business will be  conducted notice shall be given to the owners not less than four (4) weeks prior to the date of the  meeting.

3.4 Voting. Voting shall be accomplished through methods and means established by the Board.  Notice of the opportunity to vote shall be communicated to owners not less than four (4) weeks  prior to the election. Unless otherwise stated in the articles of incorporation, or these bylaws, or required by law, all matters shall be decided by a vote of a majority of the owners voting thereon.  Proxy voting is not allowed.

3.5 Quorum. At any meeting of the owners, or for any vote of the owners, a quorum necessary for making decisions shall be 5% of the total number of owners.

ARTICLE IV: Board of Directors

4.1 Powers and Duties. The Board shall be composed of not less five (5) nor more than nine (9)  Directors (the exact number to be determined by the Board), elected from among owners of the  Cooperative. Except for matters for which owner voting is required, the Board shall have full  power to govern the Cooperative, including but not limited to, hiring management and evaluating  its performance, and assuring that the mission of the Cooperative is carried out.

4.2 Eligibility, Terms, and Elections. Only owners of the Cooperative or representatives of  entities that are owners shall be eligible to serve on the Board of Directors. Elections shall occur  annually, in a manner prescribed by the Board. Directors shall serve a term of three (3) years and  shall serve staggered terms so that approximately one-third (1/3) of the Board is elected each  year. No Director may serve more than three (3) consecutive terms.

4.3 Vacancies. Any vacancy among Directors elected by the owners may be filled by  appointment by the Board. A Director so appointed shall complete the pertinent term.

4.4 Removal. A Director may be removed by decision of 2/3 of the remaining Directors for  conduct contrary to the Cooperative or failure to follow Board policies.

4.5 Meetings. The Board shall hold regular and special meetings at such time and place as it shall  determine, and all Directors shall be notified of said meeting by reasonable advance notice.  Meetings shall be open to all members unless the Board decides to go into executive session  regarding confidential or proprietary matters such as: labor relations or personnel issues;  negotiation of a contract; discussion of strategic goals or business plans, the disclosure of which  would adversely impact the Cooperative’s position in the marketplace; and/or discussion of a  matter that may, by law or contract, be considered confidential.

4.6 Action without a Meeting. Any action required of the Board outside of a regular meeting may  be taken by a quorum of the Directors by email, telephone or other means of communication  authorized by the Board Chair, provided that the action is unanimous. The Secretary shall make a  record of the action for inclusion in the minutes.

4.7 Quorum. A majority of the current Directors shall constitute a quorum and no decisions will  be made without a quorum.

4.8 Conflicts of Interest. Directors shall be under an obligation to disclose their actual or  potential conflicts of interest in any matter under consideration by the board. Directors having  such a conflict shall absent themselves from discussion and decision of the matter unless  otherwise determined by the Board. Directors may not do business with the Cooperative except  in the same manner as other owners generally do business with the Cooperative or under other  conditions that are procedurally defined to avoid preferential treatment. No employee of the  Cooperative may serve on the Board.

4.9 Board Meeting Attendance. Any Board member may be absent from 30% of regularly  scheduled Board meetings each year. The Board may take action to remove a member in  violation of this policy. Absences of a member in excess of 30% of the regularly scheduled  meetings may be approved by the Board Chair.

ARTICLE V: Officers

5.1 General. The officers of the Cooperative shall consist of Chair, Vice Chair, Secretary, and  Treasurer, each of whom must be a director, and such other officers as the Board may appoint.  All officers shall be appointed by the Board of Directors and shall serve at the pleasure of the  Board of Directors

5.2 Resignation and Removal. An officer may resign from office at any time by delivering  written notice to the Board of Directors. A resignation shall be effective when the notice is  delivered unless the notice specifies a later effective date. If a resignation is made effective at a  later date and the Cooperative accepts the future effective date, it may fill the pending vacancy before the effective date if the officer’s successor does not take office until the effective date.  The Board of Directors may remove any officer at any time with or without cause.

5.3 Vacancies. A vacancy in any office because of death, resignation, removal, disqualification  or otherwise shall be filled by the Board.

5.4 Chair. The Chair shall preside at all meetings of the Owners and the Board of Directors,  discharge all the duties that devolve upon a presiding officer, and perform such other duties as  these Bylaws or the Board of Directors may prescribe. A Director may not serve as chair for  more than one consecutive 12-month term.

5.5 Vice Chair. The Vice Chair shall perform all duties incumbent upon the Chair during the  absence or disability of the Chair, and shall perform such other duties as these Bylaws or the  Board of Directors may prescribe.

5.6 Secretary. The Secretary shall oversee preparation and maintenance of custody of minutes of  the Board of Directors’ and Owners’ meetings and authenticate records of the Cooperative. The  Secretary shall keep or cause to be kept in a book provided for the purpose a true and complete  record of the proceedings of all meetings. The Secretary shall attend to the giving of all notices  and shall perform such other duties as these Bylaws or the Board of Directors may prescribe.

5.7 Treasurer. The Treasurer shall oversee the custody of all the funds and securities of the  Cooperative, and shall deposit or cause others to deposit the same in the name of the Cooperative  in such banks or credit unions as the Directors may select. The Treasurer shall perform such  other duties as these Bylaws or the Board of Directors may prescribe.

5.8 Transfer of Authority. In case of the absence of any officer of the Cooperative or for any  other reason that the Board of Directors may deem sufficient, the Board of Directors may  transfer the powers or duties of that officer to any other officer or to any other director of the  Cooperative.

ARTICLE VI: Patronage Dividends

6.1 Allocations to Owners. The Cooperative shall allocate and distribute to owners the net profit  from business done with them in such a manner as to qualify them as patronage dividends  consistent with cooperative principles, applicable state and federal laws and generally accepted  accounting principles. The Board shall determine when and how such allocations and  distributions will be made, including the amount if any distributed in cash and the form of any  amount distributed as equity, whether the allocations will be made in one or more divisions,  departments or allocation units, and whether all or part of the excess margins shall be set-aside in  capital or other necessary reserves. Net margins from business done with persons that are not  owners (or eligible patrons) may be allocated to owners and eligible patrons or set-aside in an  unallocated surplus or retained earnings (if the allocation is made prior to the beginning of the  fiscal year).

6.2 Consent of Owners. By obtaining or retaining ownership in the Cooperative, each owner  consents to take into account, in the manner and to the extent required by federal and state tax  law, any patronage dividend received from the Cooperative.

6.3 Reserves. Amounts carried in reserves shall be allocated on the books of the Cooperative on  a patronage basis or in lieu thereof the books and records of the Cooperative shall afford a means  of doing so at any time so that in the event of distribution each owner and eligible patron may  receive a pro rata share of such distribution. Amounts carried in reserves or unallocated surplus  and not allocated to the owners and patrons may be so allocated by the Board at any time.

6.4 Extraordinary Gains. Margins produced by a transaction (such as income from the lease of  premises, investment in securities, or from the sale or exchange of capital assets) which is  directly related to the Cooperative’s business will be deemed to be patronage sourced margins  and may be distributed to member – owners in proportion, insofar as is practicable, to their  patronage during any period to which such margins are attributable, as determined by the Board.

6.5 Allocation of Losses.

a.  Operating Losses. An operating loss will be apportioned among the owners and eligible patrons during the year of loss so that the loss will, to the extent practicable, be borne by those owners and patrons with respect to the loss year on an equitable basis, including charging the  loss against allocated reserves, unallocated surplus, or the patronage equity. Owners and patrons  may not be directly assessed for any loss. The Board may also direct that all or part of any loss be carried forward or back so long as any carry-forward or carryback will not place an  inequitable burden upon past or future owners.

b. Other Losses. If, in any fiscal year, the Cooperative incurs a loss other than an operating loss,  the Board may determine the basis on which patronage capital furnished by the owners and  eligible patrons may be reduced or such loss is to be otherwise equitably apportioned among the  owners and eligible patrons.

ARTICLE VII: Dissolution

7.1 Asset Distribution: The Cooperative may be dissolved upon a decision of the Board and a  two thirds (2/3) vote of the owners who participate in the vote. Upon dissolution of the  Cooperative, its assets shall be distributed in the following manner and order: (i) by paying or  making provision for payment of all liabilities and expenses of liquidation; (ii) by redeeming all  outstanding preferred stock and any unpaid cumulated dividends; (iii) by redeeming outstanding  Common Stock at the par value of $200 per share plus any declared and unpaid dividends, (iv)  by redeeming any equity accounts which, if they cannot be paid in full, shall be paid in the order  of the oldest outstanding amounts; (v) by distributing any remaining assets in a way that furthers  the Cooperative’s mission and which is consistent with applicable law, as determined by the  Board.


8.1 Amendments. These bylaws may be amended or repealed in whole or in part by a majority of  the owners who participate in the vote. An amendment may be proposed by decision of the  Board or by petition of at least ten percent (10%) of active owners. The proposed amendment  shall be publicized to the owners not less than four (4) weeks prior to the voting process, which  shall be held at a time and in a manner determined by the Board.