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Request of Board Commitment to Shareholder Interests

(May 21 and May 30, 2003)

Copied below are letters sent on May 21 and May 30, 2003 to the members of the board of directors of Farmer Bros. Co., addressing questions raised by a May 15, 2003 lawyer's response to a shareholder Delegate's requests for information.  In the first letter, the Forum's chairman asks the board to decide whether the company's management will respect shareholder interests, encouraging a constructive response to resolve the information requests without the diversion or costs of disputing their attorney's legal theories.  In the absence of a constructive management response, the letter states that the Delegate intends to avoid unnecessary arguments by simply asking the SEC whether it will support the lawyer's theory that a company has the right to impose conditions on a public investor's use of required information disclosures.

The shareholder Delegate's information requests and demand for records was made initially in a March 13, 2003 letter, and repeated in letters of March 31 and April 11, 2003.  The Forum chairman had previously directed board attention to the unanswered Delegate requests in a May 2, 2003 letter, noting that an April 30, 2003 press release had publicly stated the company's recognition that management's recent provision of the requested information in response to an  identical demand of Franklin Mutual Advisers was "legally mandated under California law."

In the absence of communication from any representative of the company, the second letter was sent on May 30, 2003 seeking an indication of management's intent to respond.

 

 

[letterhead]

LUTIN & COMPANY

575 Madison Avenue

New York, New York 10022

Telephone (212) 605-0335

Facsimile (212) 605-0325

 

 

                                                      May 21, 2003

 

By telecopier: 310/320-2436

 

Messrs. Guenter W. Berger,

Lewis A. Coffman,

Roy E. Farmer,

Roy F. Farmer,

Thomas Maloof,

John H. Merrell, and

John Samore, Jr.

c/o Farmer Bros. Co.

20333 South Normandie Avenue

Torrance, California 90502

 

 

To the members of the board of directors of Farmer Bros. Co.:

 

      The accompanying May 15, 2003 letter from Mr. Waxman of Skadden Arps Slate Meagher & Flom LLP, an attorney engaged to represent Farmer Bros., has raised questions about management intentions to provide the company's public shareholders with fair access to information.

 

      I have asked Mr. Brennan, the shareholder Delegate, to defer his reply to Mr. Waxman until the company's directors have had an opportunity to determine how management should proceed.  If you confirm the board's commitment to shareholder interests, we assume it will be possible to resolve the Delegate's information demand cooperatively, without the diversion or costs of addressing Mr. Waxman's legal theories.

 

      The objective of the Delegate's demand, as stated in his letters, is simply to provide all shareholders with fair and equal access to "information that can be used for investment decisions."  Management was repeatedly encouraged to make its own public reports of the essential information in SEC filings, without nonessential details.  The demand for records was applicable only in the absence of the requested public reporting, if shareholders were forced to research the source material themselves.

 

      There can be no real question about what will serve shareholders.  The requested information is clearly relevant to investor interests, based on what the SEC requires for public reporting by investment companies under the Investment Company Act of 1940.  Additionally, as previously noted, the company has recently provided the requested information to one large investor, and acknowledged its obligation to do so.

 

      Under these circumstances, the only question would appear to be whether the management of Farmer Bros. will respect shareholder interests.

 

      I hope you will decide that the company's management should respond constructively.  If you do, please be assured that both Mr. Brennan and I will welcome discussions of any practical alternatives your representatives may suggest to provide the company's public shareholders with fair access to information.  But we do not wish to engage in unnecessary arguments about your attorney's legal theories at the expense of the company's shareholders.  Instead, in the absence of a constructive response, the shareholder Delegate will simply ask the SEC to determine whether Farmer Bros. has the right to restrict public investors' use of required information disclosures.

 

 

                                                      Sincerely yours,

 

 

 

 

                                                      Gary Lutin

 

 

cc:  John M. Anglin, Esquire

      Mr. Peter F. Brennan

      Mr. John E. Simmons

      Eric S. Waxman, Esquire

 

 

[accompanying copy of May 15, 2003 letter]

 

 ***

 

[letterhead]

LUTIN & COMPANY

575 Madison Avenue

New York, New York 10022

Telephone (212) 605-0335

Facsimile (212) 605-0325

 

 

                                                      May 30, 2003

 

 

 

By telecopier: 310/320-2436

 

Messrs. Guenter W. Berger,

Lewis A. Coffman,

Roy E. Farmer,

Roy F. Farmer,

Thomas Maloof,

John H. Merrell, and

John Samore, Jr.

c/o Farmer Bros. Co.

20333 South Normandie Avenue

Torrance, California 90502

 

 

 

To the members of the board of directors of Farmer Bros. Co.:

 

      I am not aware of any response to my May 21, 2003 letter, a copy of which accompanies this letter for your reference.

 

      Please let me know if you intend to respond but require more than a few more days to do so.

 

 

                                                      Sincerely yours,

 

 

 

 

                                                      Gary Lutin

 

 

 

cc:  John M. Anglin, Esquire

      Mr. Peter F. Brennan

      Mr. John E. Simmons

      Eric S. Waxman, Esquire

 

 

The Forum is open to all Farmer Bros. shareholders, whether institutional or individual, and to professionals concerned with their investment decisions.  Its purpose is to provide shareholders with access to information and a free exchange of views on issues relating to their evaluations of alternatives.  As stated in the Forum's Conditions of Participation, participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

There is no charge for participation.  Franklin Mutual Advisers, LLC, the manager of funds owning approximately 12.6% of Farmer Bros. shares, provided initial sponsorship for the Forum and arranged for it to be chaired by Gary Lutin.  Continuing support and guidance of the Forum is provided by an Advisory Panel of actively interested shareholders.

For additional information or to be included in an email distribution list, send an inquiry to farm@shareholderforum.com.