Amendments to the Articles of Incorporation
& the Bylaws of the Davis Food Co-op

Each Proposition is presented on the Propositions Page with an analysis of the nature and effects of the measure (as called for in our Bylaws).

Below you will find the text of what would be changed, showing how the sections will read if each Proposition passes, with deleted language in strikeout type and new language in underlined type.

Jump to a Proposition:
Proposition 1: Additional Non-voting Shares
Proposition 2: Staff Directors
Proposition 3: Alternate Directors
Proposition 4: Method of Removal of Directors
Proposition 5: Member Initiative
Proposition 6: Election Calendar
Proposition 7: Termination of Membership for Cause
Please note that as of 6/3/09 there is a correction to the Analysis for Prop. 7
Proposition 8: Elections

Proposition 1: Additional Non-voting Shares

Read Proposition and arguments

Proposition One – Additional Non-voting Shares FAILS
(required two-thirds of votes cast to pass, in order to amend Articles of Incorporation)
Yes – 426 (57.18%)
No – 319 (42.82%)

Proposed Amendment to the Articles of Incorporation:

Article V
(A) This corporation is authorized to issue only one (1) class of voting Membership shares. In addition, the corporation may issue other classes of non-voting shares, eligible to receive dividends. The total number of shares it is authorized to issue is ten million (10,000,000). The par value of all such shares is ten million dollars ($10,000,000).
(B) The maximum number of Membership and non-voting shares one shareholder may hold at one time is four percent (4%) of the total number of shares issued and outstanding at any one time. No shareholder may exercise more than one (1) vote.

Proposed Amendment to the Bylaws:

Article III. Section 10. Membership Shares.
The term “Membership Shares” shall refer to those shares a shareholder must hold to vote under Article IV, section 5.
(A) Assessed Shares. The term “Assessed Shares” shall refer to those shares which the board annually requires members to purchase to remain a member in good standing.
(B) Required Shares. The term “Required Shares” shall refer to the shareholder’s membership shares plus any shares assessed while s/he was a shareholder (Article IV, Section 7A, parts 2 & 3), less any shares from whose purchase s/he was exempted (Article IV, Section 7D).

Section 11. Voluntary Non-voting Shares. The term “Voluntary Non-voting Shares” shall refer to those shares voluntarily purchased by members in good standing, which are not required shares.

Section 11. 12. Proprietary Interest. A shareholder’s Proprietary Interest in the Cooperative includes holdings of Membership Shares, Assessed Shares, Voluntary Non-voting Shares, and any retained patronage distributions held by the Cooperative in the name of the shareholder. The value of the Proprietary Interest in is measured by its carrying value on the books of the Cooperative.

Article IV. Section 2. Becoming a Shareholder.
(A) (2) acquire the maximum dollar amount of Membership Shares of stock in the Cooperative as described in Article IV Section 7 of these Bylaws.
(C) The person shall pay ten dollars ($10) as purchase of his or her initial Membership
Shares. In case of doubtful eligibility, membership shall be subject to approval by the Board of Directors. Should the membership application be rejected, the $10 in initial Membership Shares will be refunded within two weeks of the date of the application.

Article IV. Section 5. Membership Rights and Privileges.
(G) Shareholders are not entitled to receive any dividends with respect to their Membership and Assessed shareholdings, but may receive them for Voluntary Non-voting shareholdings, at the discretion of the Board.
(H) No member of this corporation may be held liable for the debts of the Cooperative beyond the amounts, if any, credited toward shares. In the event of dissolution, bankruptcy, or reorganization, claims for Voluntary Non-voting shareholdings will take precedence over those for Membership and Assessed shareholdings.

Article IV. Section 3. Membership Responsibilities and Restrictions.
(A) A shareholder shall hold all Required Shares.

Article IV. Section 7. Membership Shares.
(A) Purchase of Shares.
(1) Maximum Dollar Amount of Shares Held By Any Member. At any time the Board
shall have in effect a resolution setting the maximum dollar amount of Membership Shares that can be issued to or held by any member. The Board is permitted to make changes to the maximum dollar amount of Membership Shares either based on (a) a change in the California law regulating share investments in consumer cooperatives, or (b) if the Cooperative has obtained permission from the California Department of
Corporations to sell additional shares.
[If neither has taken place, the maximum dollar amount of Membership Shares shall be increased by a minimum of $100 every ten years, beginning in January 2003.]
(2) Voluntary purchase. A shareholder may voluntarily purchase shares at any time, except that no shareholder may hold more than the maximum dollar amount of Membership Shares, or more than 4% of the total shares issued and outstanding, whichever is less
(3) Annual Assessed Shares. Each shareholder who owns fewer than the maximum dollar amount of Membership Shares shall purchase and continue to own $20 in additional shares each year until the maximum dollar amount of Membership Shares is reached. The Assessed Shares must be purchased on or before the last day of March, or another month if so designated by the Board, each year. This requirement to purchase Assessed Shares shall be in addition to, and not reduced by, any purchase of shares as a result of patronage refunds.
(4) Incentives for purchase of additional shares. The Board of Directors may provide
incentives to attract the voluntary purchase of additional shares in addition to Required Shares. The Board shall publish its policy on such incentives.
(B) Shares Owned by a Business. Upon acceptance into membership and upon any assessment of shares, the Board of Directors may require a business shareholder to purchase more than the number of shares required of a consumer shareholder. The Board shall issue regulations on the number and manner of purchase of such Required Shares. Business shareholders must be notified of this requirement and regulations whenever they are required to buy shares.
(D) Share purchase exemption.
(1) The Board of Directors may exempt a shareholder from the requirement to purchase additional Required Shares:
(a) if the shareholder has first applied for membership and purchased his or her initial
Membership Shares within ninety (90) days before the deadline for the purchase of
the Required Shares;
(E) Notice of Share Assessment. (3) This notice shall contain:
(c) notice that the shareholder’s good standing will be suspended on that date if the
Required Shares have not been purchased and exemption has not been granted;
(G) Voluntary Non-voting Shares. Voluntary Non-voting Shares may be issued to members in good standing who have acquired the maximum dollar amount of required shares. Voluntary Non-voting dividend shares shall have no voting power. Dividends may be paid on Voluntary Non-voting Shares at the discretion of the Board of Directors, not to exceed eight percent (8%) per annum. Dividends, if declared, shall not be cumulative.

Article IV. Section 14. Gifts of Proprietary Interests.
A member may make a gift to the Cooperative of any Proprietary Interest by affirmatively so communicating to the Cooperative. A Proprietary Interest of member shall also be transferred to the Cooperative if the following procedures have been complied with: (i) at any time after such interest would otherwise escheat to the state, the Cooperative shall provide at least sixty days prior notice of the proposed transfer to the Cooperative by first-class or second-class mail to the last address of the member shown on the Cooperative’s records and by publication in a newspaper of the general circulation in the county in which the Cooperative has its principal office; and (ii) no written notice objecting to the proposed transfer is received by the Cooperative from the affected member prior to the date of the proposed transfer. A member who fails to provide written notice objecting to the proposed transfer shall be deemed to have made a gift of such interest to the Cooperative as of the effective date of the transfer.

Article V. Section 1. Governing Principles.
The business of the Cooperative shall be conducted according to the following principles:
(C) No dDividends on capital. No dividends shall be declared or paid with respect to
Membership or Assessed Shares. Dividends for Voluntary Non-voting Shares, if declared by the Board, shall be paid in a manner set forth by a resolution of the Board.

Article V. Section 4. Net Surplus Savings and Earnings.
(A) Computation of net earnings. For purposes of this article the net earnings of the Cooperative shall be based on the annual financial report and computed, in accordance with generally accepted accounting practices, as follows:
(1) without regard to patronage refunds;
(2) after declaration of dividends for Voluntary Non-voting Shares;
(23) before provisions for federal and state income taxes; and
(34) after allocating to the Reserve fund the net amount, after federal and state income taxes, of any gains or losses resulting from the sale or exchange of land, buildings, or equipment.
(B) Application of net earnings.
(5) Patronage dividends shall be paid in the manner and to the extent required by the
Internal Revenue Code and Treasury Department regulations to qualify for income tax deductions for the Cooperative. A qualified written notice of allocation shall be mailed to those eligible within eight-and-a-half months of the end of the fiscal year, including payment in cash of 20% or more, as determined by the Board. Any amounts not paid in cash will be credited as payment on additional shares until a shareholder owns the maximum dollar amount of Membership Shares, after which all amounts will be paid in cash;

Back to Top

Proposition 2: Staff Directors

Read Proposition and arguments

Proposition Two – Staff Directors FAILS
Yes – 306
No – 468

Proposed Amendment to the Bylaws:

Article VIII. Section 2 (B) A maximum of two eligible shareholders who are paid employees of the Cooperative may serve as members of the Board (whether as two directors, two alternates, or one of each) at any one time, if they are not disqualified by any other provision of these Bylaws.

Article VIII. Section 2. Eligibility
(C) The following are excluded from serving on the Cooperative’s Board of Directors:
(...)
4. Paid employees of the Cooperative.

Article VIII. Section 12. Vacancies
(A) Interim director. In the event of a vacancy among the directors, through death, resignation, incapacity or other cause, the remaining directors shall select an interim director to serve until an elected successor is installed. If the vacating director was a paid employee of the Cooperative when elected, the Board shall if possible appoint a paid employee as interim director. Otherwise, the The Board shall select the alternate who received the highest number of votes. If there are no alternates, the Board may appoint an interim director from among the shareholders eligible to serve as directors, to serve under the same terms as interim directors appointed from among the alternates.

Back to Top

Proposition 3: Alternate Directors

Read Proposition and arguments

Proposition Three – Alternate Directors FAILS
Yes – 311
No – 424

Proposed Amendment to the Bylaws:

Article VIII. Section 2 (B) A maximum of two eligible shareholders who are paid employees of the Cooperative may serve as members of the Board (whether as two directors, two alternates, or one of each) at any one time, if they are not disqualified by any other provision of these Bylaws.

Article VIII. Section 3. Alternate Members. Alternates are appointed only as fol-lows: at each election of directors, the candidate having the highest number of votes after all vacancies on the Board of Directors have been filled shall be the first alternate, and the candidate with the next highest number of votes shall be the second alternate; or, in the absence of candidates described above in this section and in the event of vacancy, by a majority vote of the serving directors. Alternates shall serve until candidates elected in the next election of directors are installed. Alternate Board members can vote at Board meetings only as follows: the first alternate can participate in a vote only if no more than eight directors are present, and the second alternate can vote only if no more than eight other directors and alternates are present.

Article VIII.
Section 6.
(C) Notice. Each director and alternate shall be notified personally at least seven days prior to each meeting. Notice of the time, place and major agenda items shall be posted in the store at least seven days prior to the meeting.
(E) Adjournment. The meeting shall be adjourned when there are no longer five directors and alternates present, or when the Board votes to adjourn, whichever comes first.

Article VIII. Section 10. Removal by Board.
(A) Any director or alternate who: (...)
(C) When absence, or unexcused absence, from the next Board meeting would result in a director or alternate being subject to removal, the Secretary shall notify the director or alternate fifteen days before the meeting by certified mail.
(D) A director or alternate subject to removal under sub-section (A) of this Section shall be removed unless at least six (6) of the remaining directors vote that the director or alternate has shown good cause for the actions that led to his or her being subject to removal, and that he or she has demonstrated continuing capacity to function as a director or alternate. The good cause shall in all cases be described in the minutes of the meeting at which the vote is taken.

Section 11. Removal of Director by Membership. Any director or alternate may be
removed from office by a vote of a majority of the shareholders in good standing who are present and voting at a duly held membership meeting at which a quorum is present, the notice of which includes such purpose; or by a duly held written ballot as defined in Article IX of these Bylaws.

Article VIII. Section 12. Vacancies
(A) Interim director. In the event of a vacancy among the directors, through death, resignation, incapacity or other cause, the remaining directors shall select an interim director to serve until an elected successor is installed from among the shareholders eligible to serve as directors, to serve under the same terms. If the vacating director was a paid employee of the Cooperative when elected, the Board shall if possible appoint a paid employee as interim director. Otherwise, the Board shall select the alternate who received the highest number of votes. If there are no alternates, the Board may appoint an interim director from among the shareholders eligible to serve as directors, to serve under the same terms as interim directors appointed from among the alternates.

Article IX. Section 3. (E) Tied vote. In case of a tied vote for a director’s or alternate’s
position, the candidate who first filed a declaration of candidacy shall be deemed to have the plurality of votes.

Back to Top

Proposition 4: Method of Removal of Directors

Read Proposition

Proposition Four – Method of Removal of Directors PASSES
Yes – 696
No – 50

Proposed Amendment to the Bylaws:

Article VIII. Section 10. Resignation and removal. A director may resign from office upon notice to the President. A director shall be presumed to have resigned if he or she: (i) has ceased to meet the qualifications as a director; (ii) has accumulated three absences from meetings of the Board within any one-year period; or (iii) has been declared of unsound mind by a final order of court or convicted of a felony. A director may be removed from office by action of a majority of members.
Removal by Board.
(A) Any director or alternate who:
(1) no longer meets the requirements for election to the Board, as specified in Article VIII, Section 2 of these Bylaws, or
(2) has three (3) unexcused absences from meetings of the Board within any one-year period, or (3) has absences, whether excused or not, from more than three (3) meetings within any six-month period, or from more than half the meetings during that period, (whichever is greater), shall be subject to removal at the next regularly scheduled meeting that occurs 15 or more days later. The Secretary shall notify the director at least 15 (fifteen) days before this meeting, by certified mail, that he or she is subject to removal.
(B) Absences may be excused by a vote of the Board: (1) at or before the meeting for which excuse is sought, or (2) at the next regularly scheduled meeting thereafter. The cause for the absence shall in all cases be described in the minutes of the meeting at which the vote to excuse is taken.

Back to Top

Proposition 5: Member Initiative

Read Proposition

Proposition Five – Member Initiative PASSES
Yes – 455
No – 284

Proposed Amendment to the Bylaws:

Article X. Section 2. Initiative. An issue submitted by petitions signed by not less than five percent of shareholders in good standing which specify any lawful and proper purpose shall be presented to members within six months of such submission either at a regularly scheduled balloting or by balloting specially called for the purpose. The determination of five percent of shareholders in good standing shall be made based on the last day of the month preceding the date on which petitions are submitted.
(A) Special election. Members may call a special election and submit a proposal to a vote of the membership by submitting the proposal in writing, supported by a petition of twenty percent (20%) of the shareholders in good standing.
(B) Addition to scheduled ballot. If such a proposal and petition signed by fifteen percent (15%) of the shareholders in good standing is submitted at least thirty (30) days before the mailing date of an already scheduled regular or special election ballot, the Board shall place the proposal on that ballot.
(C) Effects. An initiative vote is binding upon the Board of Directors only if it represents an action reserved to the members under the bylaws. Otherwise it is advisory. No initiative vote shall have the effect of invalidating, modifying or otherwise affecting any then-existing contractual relationship with an outside party except that such vote may prohibit renewal of an existing contract.

Back to Top

Proposition 6: Election Calendar

Read Proposition

Proposition Six – Election Calendar PASSES
Yes – 621
No – 112

Proposed Amendment to the Bylaws:

Article IX. Section 6. Election Materials. (B) Deadlines. Candidates’ names, statements, and arguments that are submitted at least ten (10) twenty (20) days before the mailing date shall be included in the election materials as specified below. Member initiatives (Article X, Section 2B) that qualify at least thirty (30) forty-five (45) days before the mailing date shall be included.

Back to Top

Proposition 7: Termination of Membership for Cause

Read Proposition
Please note that as of 6/3/09 there is a correction to the Analysis for Proposition 7; the proposed Amendment below needs no correction.

Proposition Seven – Termination of Membership PASSES
Yes – 660
No – 76

Proposed Amendment to the Bylaws:

Article III. Section 7. Working Shareholder in Good Standing. The term “working shareholder in good standing” shall apply to those shareholders who have complied with Article IV, Section 3, parts (A) through (EF).

Article IV. Section 3. Membership Responsibilities and Restrictions.
(D) While on Cooperative premises, a member shall act reasonably at all times. For the purposes of this part, unreasonable conduct shall include, but not be limited to, actual or threatened violence, battery, assault, or harassment towards any Cooperative employee, member, customer, or other individual lawfully permitted on Cooperative premises.
(DE) Re-registration. Each shareholder shall re-register annually in a manner approved by the Board of Directors.
(EF) In order to be a working shareholder in good standing, a shareholder shall comply with parts (A) through (D) above, and in addition, he or she, or such a person as he/she may designate, shall volunteer the standard number of hours per month determined by the Board of Directors or its delegates, unless the shareholder has been exempted as described below. The type of volunteer work acceptable for work credit shall be determined by the Board. The Board of Directors or its delegates may only grant a reduction of, or exemption from, the assessment for the work requirement for working-shareholder status to individuals who fall into hardship categories established by the Board. A hardship is a condition that makes it unduly difficult, or impossible, for an individual to volunteer the required hours. The
Board of Directors shall determine and publish criteria for such exemptions.
(FG) The shareholder is responsible for all actions taken under the shareholder’s membership.
(GH) For any change in mailing address, in composition of the household, or in authorized agents, each shareholder shall notify the Cooperative in the manner determined by the Board of Directors, within ten (10) days of such change.
(HI) In any dispute between the Cooperative and any of its members or former members which cannot be resolved through informal negotiation, it shall be the policy of the Cooperative to prefer the use of mediation whereby an impartial mediator may facilitate negotiations between the parties and assist them in developing a mutually acceptable settlement. No party with a grievance against the other shall have recourse to litigation until the matter is submitted to mediation and attempted to be resolved in good faith.

Section 5. Membership Rights and Privileges.
(A) A shareholder may become a shareholder in good standing by complying with Article IV, Section 3, parts (A) through (DF) inclusive, of these Bylaws.

Section 12. (A) Expulsion, Suspension or Termination for Cause. Membership may be terminated, or members may be expelled or suspended for cause by the Board, but only when such expulsion, suspension, or termination is done in good faith and under. Any expulsion, suspension, or termination shall conform to the following procedures:
(i) the member shall be given at least 15 days prior notice of the proposed expulsion, suspension, or termination and the reasons therefor, (ii) notice under this Section shall be given by first class or registered mail to the member’s last known address as shown on the corporation’s records; and (iiiii) the member shall have the opportunity to be heard by the Board, orally or in writing, not less than five days before the effective date of the proposed expulsion, suspension, or termination. Nothing in this Section shall be deemed to limit the ability of the Cooperative to prohibit or restrict the presence of any individual from Cooperative premises for health and safety reasons, as set forth in part (C) of this Section.
(B) Definition of Cause. For purposes of this Section, Ccause shall include, but not be
limited to, (i) ineligibility for membership, (ii) intentional or repeated violation of these Bylaws and (iii) willful obstruction of any lawful purpose or activity of the Cooperative, (iv) unreasonable conduct, as defined by Article IV, Section 3, part (D), above. Upon termination of membership for any reason, all rights and interests in the Cooperative shall cease except for rights to return of capital funds pursuant to these Bylaws.
(C) Limiting access to Cooperative premises for health and safety reasons. Notwithstanding any other provision of these Bylaws, the Cooperative shall have the right, at its sole discretion, to temporarily prohibit any individual from entering Cooperative premises, or limit the access of any individual to the premises to any extent, pending any procedure set forth in part (A) of this Section, if the presence of such an individual creates a health and safety concern for any Cooperative employee, member, customer, or other individual lawfully permitted on Cooperative premises. For the purposes of this part, “safety concerns” shall include, but not be limited to, any conduct that the Cooperative deems actual or threatened violence, battery, assault, hostility, or harassment towards any other Cooperative employee, member, customer, or other individual lawfully permitted on Cooperative premises. Similarly, for the purposes of this part, “health concerns” shall include conditions that pose an
immediate or ongoing health risk to other Cooperative employees, members, customers, or other individuals lawfully permitted on Cooperative premises.

Back to Top

Proposition 8: Elections

Read Proposition

Proposition Eight – Elections PASSES
Yes – 639
No – 78

Proposed Amendment to the Bylaws:

Article IX. Section 7. Publicity.
(C) Equal access. Proponents and opponents of any ballot measure shall have equal and reasonable access to publicity. All candidates shall have equal and reasonable access to publicity from the date of their candidacy onward. The right of equal access to publicity includes:
(1) the statement for or against any ballot measure in the Voter’s Pamphlet;
(2) the endorsement spaces in the store and on the Co-op’s web site; and,
(3) access to the membership mailing list by candidates for director, or proponents or opponents of ballot issues, shall be granted in conformity with California Corporations Code section 12600 to a member or members possessing 5 percent or more of the voting power for a purpose reasonably related to the members’ interest as members. Where the corporation reasonably believes that the information will be used for another purpose, or where it provides a reasonable alternative, it may deny the member access to the list.
(D) Board and management restricted. Once a measure has been placed on an Election ballot by a vote of the Board, the Board or Management may no longer use Co-op resources to advocate for or against that measure.
(E) Campaigning inside and outside of store. No one may engage in leafleting, petitioning or soliciting within the store proper. Soliciting means being present for the purpose of engaging in election discussions with members and attempting to convince them to vote in a certain way. Leafleting, petitioning, or soliciting outside the store on Co-op property shall be subject to reasonable regulations.

Back to Top