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Conditions of Participation
Forum for Shareholders of Farmer Bros. Co.
June 14, 2004
An independent “Forum” for shareholders of Farmer Bros. Co. (the “Company”)
was initiated to provide its “Participants” with effective access to
information and a meaningful exchange of views on issues relating to
investor interests. Transition Investments, Inc. (the “Manager”) is
providing the services of its president, Gary Lutin, to conduct the Forum’s
activities according to the conditions stated below.
Forum Participants
1.
Participation: The Forum is open,
free of charge, to all Company shareholders, whether institutional or
individual, and to anyone with fiduciary or professional responsibilities
relating to shareholder decisions (including Company directors and officers,
advisers to investors or Company management, regulatory officials,
journalists, educators, etc.). As stated in this section, each such
“Participant” is expected to make independent use of information obtained
through the Forum and may choose to express views either anonymously or for
attribution, subject to the privacy rights of other
Participants.
2.
Forum Activities: Forum activities may involve a variety of
communication processes, ranging from publicly distributed reports to
private discussions between the Manager and individual Participants, if and
as appropriate to (a) define issues relevant to shareholder interests, (b)
obtain and provide to Participants the information needed for their
independent investor decisions, (c) assure management awareness of
shareholder views, (d) monitor management’s conduct of the Company’s affairs
in the interests of shareholders, (e) identify resources or services
applicable to shareholder interests, and (f) support any shareholder
interests in litigation. Information of general Forum interest will be
distributed to all Participants who provide an email address for that
purpose, subject to the Forum privacy commitment. More specialized subjects
may be addressed in separate “workshops” or similar processes, so that
Participants can be selective in their attentions to activities and issues.
3.
Independence of Participant: Each Participant is expected to
act independently. Participation in the Forum, including any of its
components or functions, is not intended either (a) to be or to encourage an
agreement among Participants to act in concert, or (b) to restrict in any
way the freedom of Participants to enter into independent agreements for any
purposes they may wish. Any such independent agreements of Participants,
including separate agreements between Participants, will be considered
unrelated to the Forum. It should of course be understood that no
Participant may act for or on behalf of the Forum or its Manager, or
represent that it is doing so.
4.
Privacy: The communications of a
Participant with the Manager or others involved in the Forum will be
considered private and anonymous, and the Manager will not disclose a
Participant's identity or views without the Participant's specific consent.
Participation in the Forum is subject to the Participant’s agreement to
respect the privacy rights of other Participants, including under
circumstances in which the Participant may learn the identity or views of
another Participant as a result of involvement in the Forum.
5.
Manager Not Representing Participants: It should be
understood that the Manager (including for these purposes any employee or
agent of the Manager) will have no responsibility or authority to represent
or act on behalf of any Participant unless an exception is specifically
agreed to in writing by both Participant and the Manager, and that neither
the Manager nor any Participant will otherwise be responsible for any acts
or conduct of the other. Specifically, the Manager will neither solicit nor
accept proxies.
6.
Responsibility for Costs: Participants will have no
responsibility for any costs or other liabilities of the Forum or of the
Manager, and similarly the Forum and the Manager will have no responsibility
for any costs or other liabilities of a Participant. However, if costs
incurred by a Participant for purposes consistent with shareholder interests
addressed by the Forum are approved by the Manager as “Contributions,” those
Participant costs will be reimbursable from funds which may become available
for Forum costs according to the provisions of paragraphs
13 and
14.
Advisory Panel Membership
7.
Panel Members: A Participant with sufficient ownership
interest in the Company to justify more active support of the Forum may
serve as a Member of an Advisory Panel which defines issues to be
addressed. Participation in the Advisory Panel is distinct from
participation in other Forum activities, and will be subject to the
additional conditions stated in this section.
8.
Functions of Advisory Panel: The purpose of the Advisory
Panel is to provide views which are representative of broader shareholder
interests for guidance in defining the issues which may be addressed by the
Forum, or in other processes such as shareholder litigation. The Advisory
Panel is not intended to adopt or endorse actions, or to encourage its
Members to do so. Chaired by the Forum’s Manager, Advisory Panel
communications are expected to be informal and adaptive.
9.
Expectations of Advice: A Member of the Advisory Panel will
be expected only to offer views on subjects which interest the Member. It
is understood that any views expressed by a Member will be intended only for
private, informal consideration by other Members of the Advisory Panel and
the Manager, unless a Member presents the view explicitly in response to a
written request stating some other intended purpose, such as a survey for a
statistical report of anonymous Advisory Panel opinions. Responses to
Advisory Panel inquiries will be strictly voluntary and not a requirement of
standing as a Member.
10.
Private Information: Members of the Advisory Panel may be
presented with research, views and other information that has not been
distributed generally to Participants or otherwise publicly reported.
Recognizing that the purpose of the Forum is to provide Participants with
information relevant to independent investment decisions, the Manager will
generally obtain and report information only under conditions that would not
impose any restrictions on Participants’ intended use of the information.
However, if any information which may be presented for Advisory Panel
consideration is subject to confidentiality agreements, or if the Manager
believes that any other conditions relating to the provision of certain
Advisory Panel information might require a Member’s disclosure or impose
restrictions on a Member’s investment decisions, the Manager will inform
each Member of the relevant conditions prior to providing that information
and allow each Member to decide whether to receive it. Generally, aside
from any specific agreements that may be established for such exceptional
circumstances, it is understood that each Member will respect the private
nature of the Manager’s reports and other information, including
particularly the identities of other Members or Participants which may be
disclosed in the course of Advisory Panel communications.
11.
Member Financial Contributions: Each Member of the Advisory
Panel will be expected to provide a reasonable share of financial support
for the Forum, in proportion to the number of Company shares held by that
Member. The Manager will establish an amount per share of Company stock
which could be expected to cover approximately a third of the Forum’s costs,
to be advanced if and as a Member wishes to serve on the Advisory Panel. A
Member will not be expected to make any payments upon withdrawing from the
Advisory Panel. All such Member payments will be considered approved
“Contributions” for purposes of reimbursement as provided below in paragraphs 13 and
14.
Costs and Reimbursements
12.
Forum Costs: The Company will be asked to assume
responsibility for all costs of the Forum’s organization and conduct,
although it should be understood that the Company’s management may not agree
to do so. The Manager will therefore bear the risk of obtaining funding for
all Forum costs, including the Manager’s own fees and any expenses incurred
by the Manager for legal and other services.
13.
Approved Contributions: Any costs incurred by a
Participant, whether independently or in support of the Forum, may be
considered reimbursable “Contributions” if the Manager determines that they
are reasonable and for purposes relating to shareholder interests addressed
by the Forum. Although Contribution status may be considered after costs
are incurred under exceptional circumstances, a Participant should seek
written Manager approval of costs prior to making commitments.
14.
Reimbursement of Participant Contributions: Participants
will be reimbursed for Contributions if and as allocations of funds become
available from the Company or any other party’s assumption of responsibility
for Forum costs. After paying or reimbursing the legal expenses reasonably
incurred by the Manager in the organization and conduct of the Forum, the
remaining balance of all such funds will be divided equally, in proportion
to the amounts accrued, for application to (a) the reimbursement of each
Participant Contribution and (b) the unpaid balance of the Manager’s fees.
Rights to reimbursement will survive the completion or termination of the
Forum.
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