Franklin Mutual Advisers Makes Farmer Bros Hldr Proposal

WASHINGTON -- Franklin Mutual Advisers LLC has submitted a shareholder proposal that if passed, would allow Farmer Bros. Co. (FARM) shareholders to determine if some former and current directors are indemnified for certain actions.

According to an amended Schedule 13D filed Friday with the Securities and Exchange Commission, Franklin Mutual holds a 9.6% stake, with beneficial ownership of 184,688 common shares.

The proposal said it's "not proper" for the company to indemnify the former and current directors against expenses, judgments, fines, settlements and other amounts incurred in connection with any action concerning violations of law or breaches of duty from July 2002 to the date the proposal was submitted.

The violations or breaches relate to disclosures of information to investors, compliance with the Investment Company Act of 1940, or actions to benefit the company's controlling persons, the proposal said.

"Without this resolution, the directors themselves could choose lawyers (and pay them with the company's funds) to determine whether the company should indemnify the directors," the proposal said. "Adopting this resolution will not be unfair to any director who can establish that he actually deserves indemnification."

The current and former directors named in the proposal are John M. Anglin, Guenter W. Berger, Lewis A. Coffman, Roy E. Farmer, Roy F. Farmer, Thomas A. Maloof, John H. Merrell and John Samore Jr.

The filing didn't say what the next step is for Franklin Mutual.

Farmer Bros. primarily roasts and packages coffee and sells it to restaurants, hotels, fast-food outlets, convenience stores and hospitals.

-By Ben Siegel, Dow Jones Newswires; 202-862-3544

Updated August 1, 2003 1:23 p.m.