A Special meeting of the board of directors was called to order at 6:30 at the Davis Food Co-op Teaching Kitchen Conference Room, 537 G Street, Davis, California, by Stacie Frerichs, President.

Directors Present: Janie Booth, Julie Cross, Sam Citron, Theodora Consolacion, Stacie Hartung-Frerichs, Desmond Jolly, Steve Reynolds, Frank Fox, Dina Biscotti, Kevin Wolf

Agenda: [Directors discuss proposed Bylaw change for inclusion on the ballot.]

Julie moves to put Proposition 1 regarding Article X section 2 of the bylaws on the ballot incorporating changes as discussed in this meeting [see final draft below]

Initiative: Shall the Bylaws be amended to include more specific rules, procedures, and guidelines for the process of submitting member-proposed initiatives to the Board, and the process of approving or denying those initiatives by the Board?

Background: Our Bylaws currently permit members broad authority to submit initiatives to the Board, if they “specify any lawful and proper purpose,” so long as members secure petitions signed by at least five percent of shareholders in good standing. The Bylaws, however, do not define what they mean by “lawful” or “proper” purposes, nor do they provide detailed rules or procedures for the submission and evaluation of member-generated initiatives. Accordingly, the current language leaves some gaps and ambiguities in the initiative submission process, which must be addressed by the Board on a case-by- case basis. Proposition 1 leaves intact the members’ broad ability to collect petitions and propose initiatives, but it creates a systematic structure, by way of more specific rules, procedures, and guidelines, which are intended to: (1) help members in the process of submitting initiatives, and (2) help the Board in the process of evaluating those initiatives.

Effect of Vote: A “yes” vote on Proposition 1 will permit the Cooperative to implement specific rules, procedures, and guidelines to govern the process of submitting member initiatives to the Board, and the Board’s manner of evaluating them. A “no” vote leaves the current system in place, wherein the members do not have the benefit of these rules, procedures and guidelines when submitting initiatives, and the Board does not have their benefit when evaluating such initiatives.

The Board unanimously placed this proposition on the ballot and unanimously recommends a “yes” vote. A majority vote of the shareholders in good standing who vote in this election is required for this amendment to pass. If it passes, it will take effect immediately, as soon as the results are known.

(A) Subject to the provisions of these Bylaws, members shall have the right to submit initiatives, consisting of ~~An issue submitted by~~ petitions signed by not less than five percent of shareholders in good standing, which specify any lawful and proper purpose. The determination of what constitutes “five percent of shareholders in good standing” shall be made based on the ~~last~~ first day of the month preceding the date on which petitions are submitted or filed.

(B) Initiatives that are timely and properly filed with the Board in accordance with the requirements of these Bylaws, including Article IX, Section 6(B), shall be presented to members for a vote at the nearest upcoming regularly-scheduled general election or, at the Board's discretion, by special election (i.e., balloting specially called for that purpose) within 12 months of its filing with, or submission to, the Board. Member initiatives that are not timely and properly filed with the Board in accordance with the requirements of these Bylaws, including Article IX, Section 6(B), shall be presented to the members for a vote at the regularly-scheduled general election following the nearest upcoming general election,¹ or, at the Board's discretion, by special election within ~~six~~ 12 months ~~of such submission~~ of its filing with, or submission to, the Board. Notwithstanding any other provision of this part, initiatives that are rejected by the Board pursuant to parts (D) and (E) of this Section, shall not be presented to the members for a vote.

(C) In addition to any other applicable provision of these Bylaws, submission of an initiative shall be subject to the following procedure: prior to petitioning for the requisite number of signatures, and prior to submission of any initiative to the Board, the member(s) seeking to submit an initiative must first declare their intent to propose the initiative, in writing, to the Board or its designated agent(s), including providing a reasonably detailed description of the initiative sought. Thereafter, and in accordance with the provisions of these Bylaws governing petitioning activity (including coordination of the petitioning activity with the corporation’s management), the member(s) seeking to submit the initiative in question shall have no more than 90 days to collect the requisite number of signatures. If the proposed initiative is properly submitted to the Board, and the requisite number of signatures is collected within 90 days, the complete initiative shall be filed with the Board, or its designated agent(s), for further action. For the purposes of these Bylaws, a petition shall be deemed “filed with” or “submitted to” the Board on the date it is received by the Board, or its designated agent(s), after the completion of all relevant procedures set forth in these Bylaws.

(D) Upon receiving an initiative, the Board shall review it and inform the member(s) who submitted it, within a reasonable time, and in writing, whether the initiative satisfies the requirements set forth in these Bylaws.

(1) If any initiative is not submitted to or filed with the Board pursuant to the procedures described above, or if the Board determines that the initiative is not lawful or proper as set forth in these Bylaws, the Board shall have the authority to reject said initiative, and refuse to send it to the members for a vote. If the Board does so, it shall notify the member(s) who submitted the initiative, in writing, of its decision and the stated reasons therefor; or alternatively, the Board may issue a resolution rejecting said initiative and stating the reasons therefor. Where the Board rejects an initiative because it is not submitted or filed pursuant to the procedures set forth in these Bylaws, the Board may, at its discretion, give the member(s) who submitted said initiative an opportunity to cure the defect(s), and resubmit the initiative within a time period specified by the Board. If the Board does not provide any opportunity to cure said defect(s), no further petitioning for such an initiative may take place for at least 12 months from the date of its rejection. Where the Board rejects an initiative on the grounds that it is unlawful and/or improper, an identical or substantially similar initiative may not be proposed, unless the Board is satisfied that any unlawfulness or impropriety has been cured.

(2) If an initiative is submitted and filed properly pursuant to the procedures described above, and is lawful and proper as set forth in these Bylaws, the Board shall present the initiative to the members for a vote as described in this Section.

(3) Determinations of lawfulness and propriety shall be made by the Board, in good faith, after the exercise of reasonable diligence, without bias, and based upon the considerations set forth in this Section, as well as other considerations permitted by law or these Bylaws, which include business considerations made in the best interest of the corporation.

(E) The Board shall have discretion to determine whether any initiative submitted by member(s) has satisfied the procedures described in these Bylaws, and/or is lawful and proper as set forth in these Bylaws. For the purposes of this Section, an initiative shall be deemed “unlawful” if it actually violates, or poses a significant risk of violating, California or federal law, including (but not limited to) statutes, codes, regulations, ordinances, policies, and/or common or case law. For the purposes of this Section, an initiative shall be deemed “improper” if, among other reasons:

(1) it poses a significant risk of depriving or restricting the authority and discretion of the Board, or its designated agent(s), in the management of the corporation’s business and affairs, including its day-to-day operations;

(2) it poses a significant risk of subjecting the authority and discretion of the Board, or its designated agent(s), in the management and operation of the corporation to any third party or entity;

(3) its wording or mandates are so broad, ambiguous, or materially misleading that they do not provide practical specificity about the nature, scope, or effect of the proposed initiative;

(4) it would require an unreasonable expenditure of time, money, and resources to determine the corporation’s obligations thereunder, or to implement its requirements;

(5) it poses a significant and disproportionate risk of substantial disruption to business operations, loss of capital, or reduction in shoppers and/or sales; or

(6) it is such a controversial or divisive issue that it creates a significant and disproportionate risk of permanent member, shopper, or employee loss and/or resignations.

(F) Nothing in this Section shall be construed to deprive the Board, or its designated agent(s), from properly exercising its authority and discretion to manage the corporation’s business and affairs, including its day-to-day operations, as required by California or federal law.

(G) Notwithstanding any other provision in this Section, the Board may not, and nothing in this Section shall be construed to, deprive members of rights expressly reserved or granted to them by California or federal law.

There being no further business to come before the meeting, it was adjourned at 7:52 p.m. by a motion made by Julie, seconded by Steve, and passed unanimously.

1 Explanatory note, not to be included in the bylaws: This language is included to address the concern that the Board may receive an initiative within days or weeks of a general election, not have sufficient time to diligently consider and evaluate the initiative, and subsequently be rushed into making a decision in order to submit the initiative for a vote by the upcoming election. To avoid this problem, where an initiative is submitted too close in time to a general election (e.g., if it is not submitted within the time specified by Article IX, Section 6(B) of the Bylaws), the proposed language permits the Board to defer a vote on the initiative either to: (1) the general election following the closest general election, or (2) a special election called for purposes of voting on the initiative, within 12 months of its submission. This language is intended to provide both time and flexibility. The language offers the Board time to carefully consider each initiative submitted, and permits the proposing member(s) time to discuss the initiative with the Board if there are any issues. At the same time, the proposed language leaves the Board flexibility to call a special election within a shorter time frame, if it deems that the initiative should be put up for a vote earlier than the next general election.