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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.
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[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
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copy of May 15, 2003 letter]
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[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
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