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Management Attorney's Offer to Accommodate Shareholder Delegate's Demand for Records

(January 26 - February 8, 2006)

In a letter dated January 26, 2006 the attorney representing Farmer Bros. management offered a revised version of his December 27, 2005 proposed form of "Confidentiality Agreement" and reported management's willingness to prepare summaries of information to limit the burdens of reviewing records that the company would otherwise be obligated to produce records in response to the shareholder Delegate's December 9, 2005 demand letter.  A scanned copy of the letter with its proposed confidentiality form can be downloaded from the following link:

The Delegate replied in a February 8, 2006 letter, copied below, accepting the company's invitation to suggest summaries and presenting issues to be addressed in further refinements of the attorney's proposed form of confidentiality agreement.

 

 

Peter F. Brennan

c/o Palmer Brennan LLC

237 Park Avenue, 9th Floor

New York, New York 10017

Telephone: 212/692‑7648; Facsimile: 212/692‑7657

 

 

February 8, 2006

 

 

By telecopier: 213-621-5040

 

Joseph J. Giunta, Esquire

Skadden Arps Slate Meagher & Flom LLP

300 South Grand Avenue

Los Angeles, California 90071

 

 

                                    Re: Farmer Bros. Co. demand for records

 

Dear Mr. Giunta:

            Thank you for your letter dated January 26, 2006.

            The company’s offer to provide summaries of selected information is appreciated.  I have asked the people concerned with real estate valuations to prepare the suggestions you requested, and should be able to report what they tell me next week.

            Regarding your proposed Confidentiality Agreement, if you prefer to modify your form rather than adapt the established one, the following issues should be addressed:

  1. Your definition of “Confidential Information” should apply to factual information rather than to the records you produce.  The current definition appears to restrict dissemination of a document but not the facts that may be learned from it.
  2. Availability to the public cannot be the only relevant condition of confidential status.  Much of the information requested, such as the date of a property’s acquisition, could be generally unavailable but clearly not a trade secret.
  3. Information the company considers confidential must be specifically identified.  It is not practical to assume that the recipient will know what the company considers a trade secret without being told.
  4. Provisions are needed for agents of the Delegate to be bound by the Confidentiality Agreement.  As indicated previously, we expect to have agents of the Delegate review the material you provide, including any Confidential Information, and then based on that review prepare a report without any Confidential Information so that it can be given to shareholders for their unrestricted use in investment decisions.  You may therefore want to include a provision for your examination of the report before its dissemination to assure that no Confidential Information is included.

Please let me know if you have any questions about these issues.  Again, to accelerate our progress I ask that you transmit your response to me by fax (212-692-7657) or email (midcap@msn.com).

 

 

                                                            Very truly yours,

 

 

 

                                                            Peter F. Brennan,

                                                                        as Delegate

 

 

 

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.

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