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Shareholder Lawsuit Against Directors to Bar Control of ESOP Votes and Recover Corporate Funds

(December 4, 2003)

A shareholder lawsuit was commenced on December 4, 2003 against the directors of Farmer Bros. Co.  A copy of the complaint can be downloaded from the link below.

The action seeks injunctive relief barring management's voting control of the stock purchased by the company's ESOP, approximately 8% of the outstanding shares, and also recovery from the individual directors of the estimated $35 million corporate funds used to purchase stock for the ESOP. According to the allegations, the use of corporate funds for ESOP purchases violated applicable federal laws and was intended to entrench management to the detriment of minority shareholders.

All the company's current directors and the recently resigned director who now serves as corporate secretary are named as individual defendants. These are the same individuals who are identified in the Franklin Mutual proposal for a shareholder vote to determine whether their conduct met the standards required by California statutes for corporate indemnification.

The lawsuit is brought on behalf of a plaintiff class that includes all Farmer Bros. shareholders other than the company's officers and directors, any entities controlled by defendants, and the company's ESOP or its beneficiaries.

The shareholder representing the plaintiff class is Leonard Rosenthal, Professor of Finance at Bentley College and a frequently quoted expert on shareholder rights. Other Farmer Bros. shareholders will be advising Professor Rosenthal on their views of investor interests to guide his conduct of the litigation. Plaintiff's counsel is Goodkind Labaton Rudoff & Sucharow LLP, an experienced advocate of investor interests which had previously acted as legal counsel for the March 2003 arrangements to authorize a shareholder Delegate's demands for information.



Leonard Rosenthal, Individually, and On Behalf of All Others Similarly Situated, Plaintiff, v. Farmer Bros. Company, Guenther W. Berger, Lewis A. Coffman, Roy E. Farmer, Roy F. Farmer, Thomas A. Maloof, John M. Anglin, John H. Merrell and John Samore, Defendants
Case Number CV03 8845 MMM, United States District Court, Central District of California, filed December 4, 2003.



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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