Related Party Transactions and Outside Related Director Information

Farmers Bros. Co. (FARM)

10/24/2005 Proxy Information

Purchase of Common Stock

On December 24, 2003, the Company purchased 4,438,450 shares of Common Stock from Catherine Crowe (2,133,300 shares), sister of former Company Chairman Roy F. Farmer, and trusts created for the benefit of her children (2,305,150 shares) for the sum of approximately $110,960,000 or approximately $25.00 per share. The closing price per share of the Common Stock on NASDAQ on December 24, 2003 was $31.60. In connection with this purchase, litigation filed by the Crowe family to remove Roy F. Farmer as trustee of various family trusts was settled.

Sale of Common Stock to the ESOP

On January 9, 2004, the Company sold 1,249,390 shares of Common Stock to the Company's ESOP for $25.00 per share. The closing price per share of the Common Stock on NASDAQ on January 9, 2004 was $30.36. The Company loaned the ESOP $31,234,750 for such purpose. The loan bears interest at a variable rate equal to 1.5% per annum over a 90 day commercial paper rate adjusted quarterly and is repayable in annual installments through December 15, 2018. The Company has agreed to make contributions to the ESOP sufficient to enable it to repay the loan.

(1) Share numbers and per share prices have been retroactively adjusted to reflect a ten for one stock split declared on March 4, 2004.

Carol Farmer Waite is the sister of the late Roy E. Farmer and the daughter of the late Roy F. Farmer.