Document:

Exhibit
10.2

[FORM OF]

INDEMNIFICATION
AGREEMENT

THIS INDEMNIFICATION AGREEMENT (this “Agreement”)
is made and entered into as of                       ,
by and between Farmer Bros. Co., a Delaware corporation (the “Company”),
and                         
(“Indemnitee”).

RECITALS

WHEREAS, highly competent persons have become more
reluctant to serve publicly-held corporations as directors, officers or in
other capacities unless they are provided with adequate protection through
insurance or adequate indemnification against inordinate risks of claims and
actions against them arising out of their service to and activities on behalf
of the corporation;

WHEREAS, the Board of Directors of the Company (the “Board”)
has determined that, in order to attract and retain qualified individuals, the
Company will attempt to maintain on an ongoing basis, at its sole expense,
liability insurance to protect persons serving the Company and its subsidiaries
from certain liabilities. Although the furnishing of such insurance has been a
customary and widespread practice among United States-based corporations and
other business enterprises, the Company believes that, given current market
conditions and trends, such insurance may be available to it in the future only
at higher premiums and with more exclusions. At the same time, directors,
officers and other persons in service to corporations or business enterprises
are being increasingly subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would have been
brought only against the Company or business enterprise itself. The Certificate
of Incorporation (the “Charter”) and the Bylaws of the Company require
indemnification of the officers and directors of the Company. Indemnitee may
also be entitled to indemnification pursuant to applicable provisions of the
Delaware General Corporation Law (the “DGCL”). The Charter, the Bylaws
and the DGCL expressly provide that the indemnification provisions set forth
therein are not exclusive, and thereby contemplate that contracts may be
entered into between the Company and members of the board of directors,
officers and other persons with respect to indemnification;

WHEREAS, the uncertainties relating to such insurance
and to indemnification have increased the difficulty of attracting and
retaining such persons;

WHEREAS, the Board has determined that the increased
difficulty in attracting and retaining such persons is detrimental to the best
interests of the Company’s stockholders and that the Company should act to
assure such persons that there will be increased certainty of such protection
in the future;

WHEREAS, it is reasonable, prudent and necessary for
the Company contractually to obligate itself to indemnify, and to advance
expenses on behalf of, such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free
from undue concern that they will not be so indemnified;

WHEREAS, this Agreement is a supplement to and in
furtherance of the Charter, the Bylaws of the Company and any resolutions
adopted pursuant thereto, and shall not be deemed a substitute therefor, nor
diminish or abrogate any rights of Indemnitee thereunder; and

WHEREAS, Indemnitee does not regard the protection
available under the Company’s Charter, Bylaws and insurance as adequate in the
present circumstances, and may not be willing to serve as an officer or
director without adequate protection, and the Company desires Indemnitee to
serve in such capacity. Indemnitee is willing to serve, continue to serve and
to take on additional service for or on behalf of the Company on the condition
that he or she be so indemnified;

NOW, THEREFORE, in consideration of the premises and
the covenants contained herein and Indemnitee’s agreement to serve as a
director or officer after the date hereof, the Company and Indemnitee do hereby
covenant and agree as follows:

1.             Definitions.  As used in this Agreement:

(a)           References
to “agent” shall mean any person who is or was a director, officer, or
employee of the Company or a Subsidiary of the Company or other person
authorized by the Company to act for the Company, to include such person
serving in such capacity as a director, officer, employee, fiduciary or other
official of another corporation, partnership, limited liability company, joint
venture, trust or other enterprise at the request of, for the convenience of,
or to represent the interests of the Company or a Subsidiary of the Company.

(b)           The
terms “Beneficial Owner” and “Beneficial Ownership” shall have
the meanings set forth in Rule 13d-3 promulgated under the Exchange Act as in
effect on the date hereof.

(c)           A
“Change in Control” shall be deemed to occur upon the earliest to occur
after the date of this Agreement of any of the following events:

(i)            Acquisition
of Stock by Third Party.  Any Person is
or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing fifteen percent (15%) or more of the combined voting power
of the Company’s then outstanding securities entitled to vote generally in the
election of directors, unless (1) the change in the relative Beneficial
Ownership of the Company’s securities by any Person results solely from a
reduction in the aggregate number of outstanding shares of securities entitled
to vote generally in the election of directors, or (2) such acquisition was
approved in advance by the Continuing Directors and such acquisition would not
constitute a Change in Control under part (iii) of this definition;

(ii)           Change
in Board of Directors.  Individuals
who, as of the date hereof, constitute the Board, and any new director whose
election by the Board or nomination for election by the Company’s stockholders
was approved by a vote of at least two thirds of the directors then still in
office who were directors on the date hereof or whose election for nomination
for election was previously so approved (collectively, the “Continuing
Directors”), cease for any reason to constitute at least a majority of the
members of the Board;

(iii)          Corporate Transactions.  The effective date of a reorganization,
merger or consolidation of the Company (a “Business Combination”), in
each case, unless, following such Business Combination: (1) all or
substantially all of the individuals and entities who were the Beneficial
Owners of securities entitled to vote generally in the election of directors
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 51% of the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the election of
directors resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or
through one or more Subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination, of the
securities entitled to vote generally in the election of directors; (2) no
Person (excluding any corporation resulting from such Business Combination) is
the Beneficial Owner, directly or indirectly, of 15% or more of the combined
voting power of the then outstanding securities entitled to vote generally in
the election of directors of such corporation except to the extent that such
ownership existed prior to the Business Combination; and (3) at least a
majority of the Board of Directors of the corporation resulting from such
Business Combination were Continuing Directors at the time of the execution of
the initial agreement, or of the action of the Board of Directors, providing
for such Business Combination;

(iv)          Liquidation.  The approval by the stockholders of the
Company of a complete liquidation of the Company or an agreement or series of
agreements for the sale or disposition by the Company of all or substantially
all of the Company’s assets (or, if such approval is not required, the decision
by the Board to proceed with such a liquidation, sale, or disposition in one
transaction or a series of related transactions); or

(v)           Other
Events.  There occurs any other event
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or a response to any similar item on
any similar schedule or form) promulgated under the Exchange Act, whether or
not the Company is then subject to such reporting requirement.

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(d)           “Corporate
Status” describes the status of a person who is or was a director, officer,
trustee, general partner, managing member, fiduciary, employee or agent of the
Company or of any other Enterprise which such person is or was serving at the
request of the Company.

(e)           “Delaware
Court” shall mean the Court of Chancery of the State of Delaware.

(f)            “Disinterested
Director” shall mean a director of the Company who is not and was not a
party to the Proceeding in respect of which indemnification is sought by
Indemnitee.

(g)           “Enterprise”
shall mean the Company and any other corporation, constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger to which the Company (or any of its wholly owned subsidiaries) is a
party, limited liability company, partnership, joint venture, trust, employee
benefit plan or other enterprise of which Indemnitee is or was serving at the
request of the Company as a director, officer, trustee, general partner,
managing member, fiduciary, employee or agent.

(h)           “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

(i)            “Expenses”
shall include all direct and indirect costs, fees and expenses of any type or
nature whatsoever, including, without limitation, attorneys’ fees and costs,
retainers, court costs, transcript costs, fees and disbursements of experts,
witness fees, fees and disbursements of private investigators and professional
advisors, travel expenses, duplicating costs, printing and binding costs,
telephone and fax transmission charges, postage, delivery service fees, secretarial
services, reasonable compensation for time spent by Indemnitee for which he is
not otherwise compensated for by the 
Company or any third party, and all other disbursements or expenses in
connection with prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, or otherwise
participating in, a Proceeding or enforcing a right to indemnification under
this Agreement. Expenses also shall include Expenses incurred in connection
with any appeal resulting from any Proceeding, including without limitation the
premium, security for, and other costs relating to any cost bond, supersedeas
bond, or other appeal bond or its equivalent. Expenses, however, shall not
include amounts paid in settlement by Indemnitee or the amount of judgments or
fines against Indemnitee.

(j)            “Independent
Counsel” shall mean a law firm or a member of a law firm that is
experienced in matters of corporation law and neither presently is, nor in the
past five years has been, retained to represent: (i) the Company or Indemnitee
in any matter material to either such party (other than with respect to matters
concerning Indemnitee under this Agreement, or of other indemnitees under
similar indemnification agreements); or (ii) any other party to the Proceeding giving
rise to a claim for indemnification hereunder. Notwithstanding the foregoing,
the term “Independent Counsel” shall not include any person who, under
the applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or Indemnitee in an
action to determine Indemnitee’s rights under this Agreement. The Company
agrees to pay the reasonable fees of the Independent Counsel referred to above
and to fully indemnify such counsel against any and all Expenses, claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.

(k)           References
to “fines” shall include any excise tax assessed on Indemnitee with
respect to any employee benefit plan; references to “serving at the request
of the Company” shall include any service as a director, officer, employee,
agent or fiduciary of the Company which imposes duties on, or involves services
by, such director, officer, employee, agent or fiduciary with respect to an
employee benefit plan, its participants or beneficiaries; and if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in the
best interests of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner “not opposed to
the best interests of the Company” as referred to in this Agreement.

(l)            The
term “Person” shall have the meaning as set forth in Sections 13(d) and
14(d) of the Exchange Act as in effect on the date hereof; provided, however, that
“Person” shall exclude: (i) the Company; (ii) any Subsidiary of the
Company; (iii) any employee benefit plan of the Company including, without
limitation, the Company’s Employee Stock Ownership Plan, or of any Subsidiary
of the Company, or any Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan; (iv) a corporation
owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their 

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ownership
of stock of the Company; and (v) Roy F. Farmer, deceased, his widow Emily
Farmer and their descendants (collectively, “Farmer Family Members”),
the estates of Farmer Family Members and the personal representatives thereof,
and trusts, partnerships and other entities created by or for the benefit of
Farmer Family Members and the trustees, partners and members thereof.

(m)          A
“Potential Change in Control” shall be deemed to have occurred if: (i) the
Company enters into an agreement or arrangement, the consummation of which
would result in the occurrence of a Change in Control; (ii) any Person or the
Company publicly announces an intention to take or consider taking actions
which if consummated would constitute a Change in Control; (iii) any Person who
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 5% or more of the combined voting power of the Company’s
then outstanding securities entitled to vote generally in the election of
directors increases its Beneficial Ownership of such securities by 5% or more
over the percentage so owned by such Person on the date hereof; or (iv) the
Board adopts a resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control has occurred.

(n)           The
term “Proceeding” shall include any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought in the right of the Company or
otherwise and whether of a civil (including intentional or unintentional tort
claims), criminal, administrative or investigative nature, in which Indemnitee
was, is or will be involved as a party or otherwise by reason of the fact that
Indemnitee is or was a director or officer of the Company, by reason of any
action (or failure to act) taken by him or of any action (or failure to act) on
his part while acting as a director or officer of the Company, or by reason of
the fact that he is or was serving at the request of the Company as a director,
officer, trustee, general partner, managing member, fiduciary, employee or
agent of any other Enterprise, in each case whether or not serving in such
capacity at the time any liability or expense is incurred for which
indemnification, reimbursement, or advancement of expenses can be provided
under this Agreement.

(o)           The
term “Subsidiary,” with respect to any Person, shall mean any
corporation or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly,
by that Person.

2.             Agreement
To Serve. Indemnitee agrees to serve and/or continue to serve as an agent
of the Company, at its will (or under separate agreement, if such agreement
exists), in the capacity Indemnitee currently serves as an agent of the
Company; provided, however, that nothing contained in this Agreement is
intended to or shall (i) restrict the ability of Indemnitee to resign at any
time and for any reason from any current or future position or positions, (ii)
create any right to continued employment of Indemnitee in any current or future
position or positions, or (iii) restrict the ability of the Company to
terminate the employment or agency of Indemnitee at any time and for any reason
(subject to compliance with the terms of any employment or other applicable
agreement to which the Company (or any of its Subsidiaries) and Indemnitee are
parties).

3.             Indemnification
in Third-Party Proceedings.  The
Company shall indemnify and hold harmless Indemnitee in accordance with the
provisions of this Section 3 if, by reason of his Corporate Status, Indemnitee
was, is, or is threatened to be made, a party to or a participant (as a witness
or otherwise) in any Proceeding, other than a Proceeding by or in the right of
the Company to procure a judgment in its favor. Pursuant to this Section 3,
Indemnitee shall be indemnified against all Expenses, judgments, penalties,
fines and amounts paid in settlement (including all interest, assessments and
other charges paid or payable in connection with or in respect of such
Expenses, judgments, fines, penalties and amounts paid in settlement) actually
and reasonably incurred by Indemnitee or on his behalf in connection with such
Proceeding or any claim, issue or matter therein, if Indemnitee acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company and, in the case of a criminal Proceeding, had no
reasonable cause to believe that his conduct was unlawful.

4.             Indemnification
in Proceedings by or in the Right of the Company.  The Company shall indemnify and hold harmless
Indemnitee in accordance with the provisions of this Section 4 if, by reason of
his Corporate Status, Indemnitee was, is, or is threatened to be made, a party
to or a participant (as a witness or otherwise) in any Proceeding brought by or
in the right of the Company to procure a judgment in its favor. Pursuant to
this Section 4, Indemnitee shall be indemnified against all Expenses actually
and reasonably incurred by Indemnitee or on his 

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behalf
in connection with such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company. Notwithstanding the
foregoing, no indemnification shall be made under this Section 4 in respect of
any claim, issue or matter as to which Indemnitee shall have been finally
adjudged by a court to be liable to the Company, unless and only to the extent
that any court in which the Proceeding was brought or the Delaware Court shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnification for such Expenses as the court shall deem proper.

5.             Indemnification
for Expenses of a Party Who is Wholly or Partly Successful.  Notwithstanding any other provisions of this
Agreement, to the extent that Indemnitee is, by reason of his Corporate Status,
a party to (or a participant in) and is successful, on the merits or otherwise,
in any Proceeding or in defense of any claim, issue or matter therein, in whole
or in part, the Company shall indemnify and hold harmless Indemnitee against
all Expenses actually and reasonably incurred by him or on his behalf in
connection therewith. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or matters in such Proceeding, the Company shall indemnify
and hold harmless Indemnitee against all Expenses actually and reasonably
incurred by him or on his behalf in connection with each successfully resolved
claim, issue or matter. If Indemnitee is not wholly successful in such
Proceeding, the Company also shall indemnify and hold harmless Indemnitee
against all Expenses reasonably incurred in connection with a claim, issue or
matter related to any claim, issue or matter on which Indemnitee was
successful. For purposes of this Section and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.

6.             Indemnification
for Expenses of a Witness.  Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding to which Indemnitee
is not a party, he shall be indemnified and held harmless against all Expenses
actually and reasonably incurred by him or on his behalf in connection
therewith.

7.             Additional
Indemnification

(a)           Notwithstanding
any limitation in Sections 3, 4 or 5, the Company shall indemnify and hold
harmless Indemnitee if, by reason of his Corporate Status, Indemnitee is a
party to or threatened to be made a party to or participant in any Proceeding
(including a Proceeding by or in the right of the Company to procure a judgment
in its favor) against all Expenses, judgments, fines, penalties and amounts
paid in settlement (including all interest, assessments and other charges paid
or payable in connection with or in respect of such Expenses, judgments, fines,
penalties and amounts paid in settlement) actually and reasonably incurred by
Indemnitee in connection with the Proceeding. No indemnity shall be made under
this Section 7(a) on account of Indemnitee’s conduct which constitutes a breach
of Indemnitee’s duty of loyalty to the Company or its stockholders or is an act
or omission not in good faith or which involves intentional misconduct or a
knowing violation of the law.

(b)           Notwithstanding
any limitation in Sections 3, 4, 5 or 7(a), the Company shall indemnify and
hold harmless Indemnitee if Indemnitee is a party to or threatened to be made a
party to any Proceeding (including a Proceeding by or in the right of the
Company to procure a judgment in its favor) against all Expenses, judgments,
fines, penalties and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or in respect
of such Expenses, judgments, fines, penalties and amounts paid in settlement)
actually and reasonably incurred by Indemnitee in connection with the
Proceeding.

8.             Contribution

(a)           Whether
or not the indemnification provided in Sections 3, 4, 5 and 7 hereof is
available, in respect of any threatened, pending or completed action, suit or
proceeding in which the Company is jointly liable with Indemnitee (or would be
if joined in such action, suit or proceeding), the Company shall pay, in the
first instance, the entire amount of any judgment or settlement of such action,
suit or proceeding without requiring Indemnitee to contribute to such payment
and the Company hereby waives and relinquishes any right of contribution it may
have against Indemnitee.  The Company
shall not enter into any settlement of any action, suit or proceeding in which
the Company is jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding) unless such settlement provides for a full and
final release of all claims asserted against Indemnitee.

 5
 

(b)           Without
diminishing or impairing the obligations of the Company set forth in the
preceding subparagraph, if, for any reason, Indemnitee shall elect or be
required to pay all or any portion of any judgment or settlement in any
threatened, pending or completed action, suit or proceeding in which the
Company is jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding), the Company shall contribute to the amount of
expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Indemnitee
in proportion to the relative benefits received by the Company and all
officers, directors or employees of the Company, other than Indemnitee, who are
jointly liable with Indemnitee (or would be if joined in such action, suit or
proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction
from which such action, suit or proceeding arose; provided, however, that the
proportion determined on the basis of relative benefit may, to the extent
necessary to conform to law, be further adjusted by reference to the relative
fault of the Company and all officers, directors or employees of the Company
other than Indemnitee who are jointly liable with Indemnitee (or would be if
joined in such action, suit or proceeding), on the one hand, and Indemnitee, on
the other hand, in connection with the events that resulted in such expenses,
judgments, fines or settlement amounts, as well as any other equitable
considerations which the Law may require to be considered.  The relative fault of the Company and all officers,
directors or employees of the Company, other than Indemnitee, who are jointly
liable with Indemnitee (or would be if joined in such action, suit or
proceeding), on the one hand, and Indemnitee, on the other hand, shall be
determined by reference to, among other things, the degree to which their
actions were motivated by intent to gain personal profit or advantage, the
degree to which their liability is primary or secondary and the degree to which
their conduct is active or passive.

(c)           The
Company hereby agrees to fully indemnify and hold Indemnitee harmless from any
claims of contribution which may be brought by officers, directors or employees
of the Company, other than Indemnitee, who may be jointly liable with
Indemnitee.

(d)           To
the fullest extent permissible under applicable law, if the indemnification
provided for in this Agreement is unavailable to Indemnitee for any reason
whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute
to the amount incurred by Indemnitee, whether for judgments, fines, penalties,
excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in
connection with any claim relating to an indemnifiable event under this
Agreement, in such proportion as is deemed fair and reasonable in light of all
of the circumstances of such Proceeding in order to reflect (i) the relative
benefits received by the Company and Indemnitee as a result of the event(s)
and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative
fault of the Company (and its directors, officers, employees and agents) and
Indemnitee in connection with such event(s) and/or transaction(s).

9.             Exclusions.  Notwithstanding any provision in this
Agreement, the Company shall not be obligated under this Agreement to make any
indemnity in connection with any claim made against Indemnitee:

(a)           for
which payment has actually been received by or on behalf of Indemnitee under
any insurance policy or other indemnity provision, except with respect to any
excess beyond the amount actually received under any insurance policy,
contract, agreement, other indemnity provision or otherwise;

(b)           for
an accounting of profits made from the purchase and sale (or sale and purchase)
by Indemnitee of securities of the Company within the meaning of Section 16(b)
of the Exchange Act or similar provisions of state statutory law or common law;

(c)           except
as otherwise provided in Sections 14(e) and (f) hereof, prior to a Change in
Control, in connection with any Proceeding (or any part of any Proceeding)
initiated by Indemnitee, including any Proceeding (or any part of any
Proceeding) initiated by Indemnitee against the Company or its directors,
officers, employees or other indemnitees, unless (i) the Board authorized the
Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the
Company provides the indemnification, in its sole discretion, pursuant to the
powers vested in the Company under applicable law;

(d)           for
any Expenses, judgments, liabilities, fines, penalties and amounts paid in
settlement resulting from Indemnitee’s conduct which is finally adjudged to
have been willful misconduct, knowingly fraudulent or deliberately dishonest;
or

 6
 

(e)           if
a court of competent jurisdiction shall finally determine that any
indemnification hereunder is unlawful.

10.           Advances
of Expenses; Defense of Claim

(a)           Notwithstanding
any provision of this Agreement to the contrary, and to the fullest extent
permitted by applicable law, the Company shall advance all Expenses incurred by
or on behalf of Indemnitee (or reasonably expected by Indemnitee to be incurred
by Indemnitee within three months) in connection with any Proceeding by reason
of Indemnitee’s Corporate Status within ten (10) days after the receipt by the
Company of a statement or statements requesting such advances from time to
time, whether prior to or after final disposition of any Proceeding. Advances
shall be unsecured and interest free. Advances shall be made without regard to
Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s
ultimate entitlement to indemnification under the other provisions of this
Agreement. Advances shall include any and all reasonable Expenses incurred
pursuing a Proceeding to enforce this right of advancement, including Expenses
incurred preparing and forwarding statements to the Company to support the
advances claimed. Indemnitee shall qualify for advances, to the fullest extent
permitted by applicable law, solely upon the execution and delivery to the
Company of an undertaking providing that Indemnitee undertakes to repay the
advance to the extent that it is ultimately determined that Indemnitee is not
entitled to be indemnified by the Company under the provisions of this
Agreement, the Charter, the Bylaws of the Company, applicable law or otherwise.
This Section 10(a) shall not apply to any claim made by Indemnitee for which
indemnity is excluded pursuant to Section 9.

(b)           The
Company shall be entitled to participate in any Proceeding at its own expense.

(c)           The
Company shall not settle any action, claim or Proceeding (in whole or in part)
which would impose any Expense, judgment, fine, penalty or limitation on
Indemnitee without Indemnitee’s prior written consent.

11.           Procedure
for Notification and Application for Indemnification

(a)           Indemnitee
agrees to notify promptly the Company in writing upon being served with any
summons, citation, subpoena, complaint, indictment, information or other
document relating to any Proceeding or matter which may be subject to
indemnification or advancement of Expenses covered hereunder. The failure of
Indemnitee to so notify the Company shall not relieve the Company of any
obligation which it may have to Indemnitee under this Agreement, or otherwise.

(b)           Indemnitee
may deliver to the Company a written application to indemnify and hold harmless
Indemnitee in accordance with this Agreement. Such application(s) may be
delivered from time to time and at such time(s) as Indemnitee deems appropriate
in his sole discretion. Following such a written application for
indemnification by Indemnitee, Indemnitee’s entitlement to indemnification
shall be determined according to Section 12(a) of this Agreement.

12.           Procedure
Upon Application for Indemnification

(a)           A
determination, if required by applicable law, with respect to Indemnitee’s
entitlement to indemnification shall be made in the specific case by one of the
following methods, which shall be at the election of the Board: (i) by a
majority vote of the Disinterested Directors, even though less than a quorum of
the Board or (ii) by Independent Counsel in a written opinion to the Board, a
copy of which shall be delivered to Indemnitee. The Company promptly shall
advise Indemnitee in writing with respect to any determination that Indemnitee
is or is not entitled to indemnification, including a description of any reason
or basis for which indemnification has been denied. If it is so determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten (10) days after such determination. Indemnitee shall reasonably
cooperate with the person, persons or entity making such determination with
respect to Indemnitee’s entitlement to indemnification, including providing to
such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected
from disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination. Any costs or Expenses (including attorneys’
fees and disbursements) incurred by 

 7
 

Indemnitee
in so cooperating with the person, persons or entity making such determination
shall be borne by the Company (irrespective of the determination as to
Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies
and agrees to hold Indemnitee harmless therefrom.

(b)           In
the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel
shall be selected as provided in this Section 12(b). The Independent Counsel
shall be selected by the Board of Directors, and the Company shall give written
notice to Indemnitee advising him of the identity of the Independent Counsel so
selected and certifying that the Independent Counsel so selected meets the
requirements of “Independent Counsel” as defined in Section 1 of this
Agreement. Indemnitee may, within ten (10) days after such written notice of
selection shall have been received, deliver to the Company a written objection
to such selection; provided, however, that such objection may be asserted only
on the ground that the Independent Counsel so selected does not meet the
requirements of “Independent Counsel” as defined in Section 1 of this
Agreement, and the objection shall set forth with particularity the factual
basis of such assertion. Absent a proper and timely objection, the person so
selected shall act as Independent Counsel. If such written objection is so made
and substantiated, the Independent Counsel so selected may not serve as
Independent Counsel unless and until such objection is withdrawn or a court of
competent jurisdiction has determined that such objection is without merit. If,
within twenty (20) days after submission by Indemnitee of a written request for
indemnification pursuant to Section 11(b) hereof, no Independent Counsel shall
have been selected and not objected to, either the Company or Indemnitee may
petition the Delaware Court for resolution of any objection which shall have
been made by Indemnitee to the Company’s selection of Independent Counsel
and/or for the appointment as Independent Counsel of a person selected by the
Delaware Court, and the person with respect to whom all objections are so
resolved or the person so appointed shall act as Independent Counsel under
Section 12(a) hereof. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel
shall be discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then prevailing).
The Company shall pay any and all reasonable fees and expenses of Independent
Counsel incurred by such Independent Counsel in connection with acting pursuant
to Section 12(a) hereof, regardless of the manner in which such Independent
Counsel was selected or appointed.

13.           Presumptions
and Effect of Certain Proceedings

(a)           In
making a determination with respect to entitlement to indemnification
hereunder, the person, persons or entity making such determination shall
presume that Indemnitee is entitled to indemnification under this Agreement if
Indemnitee has submitted a request for indemnification in accordance with
Section 11(b) of this Agreement, and the Company shall have the burden of proof
to overcome that presumption in connection with the making by any person,
persons or entity of any determination contrary to that presumption. Neither
the failure of the Company (including by its directors or Independent Counsel)
to have made a determination prior to the commencement of any action pursuant
to this Agreement that indemnification is proper in the circumstances because
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including by its directors or Independent
Counsel) that Indemnitee has not met such applicable standard of conduct, shall
be a defense to the action or create a presumption that Indemnitee has not met
the applicable standard of conduct.

(b)           If
the person, persons or entity empowered or selected under Section 12 of this
Agreement to determine whether Indemnitee is entitled to indemnification shall
not have made a determination within thirty (30) days after receipt by the
Company of the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for
indemnification, or (ii) a final judicial determination that any or all such
indemnification is expressly prohibited under applicable law; provided,
however, that such 30-day period may be extended for a reasonable time, not to
exceed an additional fifteen (15) days, if the person, persons or entity making
the determination with respect to entitlement to indemnification in good faith
requires such additional time for the obtaining or evaluating of documentation
and/or information relating thereto.

 8
 

(c)           The
termination of any Proceeding or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of nolo contendere or
its equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.

(d)           For
purposes of any determination of good faith, Indemnitee shall be deemed to have
acted in good faith if Indemnitee’s action is based on the records or books of
account of the Enterprise, including financial statements, or on information
supplied to Indemnitee by the officers of the Enterprise in the course of their
duties, or on the advice of legal counsel for the Enterprise or on information
or records given or reports made to the Enterprise by an independent certified
public accountant or by an appraiser or other expert selected by the
Enterprise. The provisions of this Section 13(d) shall not be deemed to be
exclusive or to limit in any way the other circumstances in which Indemnitee
may be deemed or found to have met the applicable standard of conduct set forth
in this Agreement.

(e)           The
knowledge and/or actions, or failure to act, of any other director, officer,
trustee, partner, managing member, fiduciary, agent or employee of the
Enterprise shall not be imputed to Indemnitee for purposes of determining the
right to indemnification under this Agreement.

14.           Remedies
of Indemnitee

(a)           In
the event that (i) a determination is made pursuant to Section 12 of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses, to the fullest extent permitted by
applicable law, is not timely made pursuant to Section 10 of this Agreement,
(iii) no determination of entitlement to indemnification shall have been made
pursuant to Section 12(a) of this Agreement within thirty (30) days after
receipt by the Company of the request for indemnification, (iv) payment of
indemnification is not made pursuant to Section 5, 6, or the last sentence
of Section 12(a) of this Agreement within ten (10) days after receipt
by the Company of a written request therefor, (v) a contribution payment
is not made in a timely manner pursuant to Section 8 of this Agreement, or
(vi) payment of indemnification pursuant to Section 3 or 4 of this
Agreement is not made within ten (10) days after a determination has been
made that Indemnitee is entitled to indemnification, Indemnitee shall be
entitled to an adjudication by the Delaware Court to such indemnification,
contribution or advancement of Expenses. Alternatively, Indemnitee, at his
option, may seek an award in arbitration to be conducted by a single arbitrator
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association. Except as set forth herein, the provisions of Delaware law
(without regard to its conflict of laws rules) shall apply to any such
arbitration. The Company shall not oppose Indemnitee’s right to seek any such
adjudication or award in arbitration.

(b)           In
the event that a determination shall have been made pursuant to Section 12(a)
of this Agreement that Indemnitee is not entitled to indemnification, any
judicial proceeding or arbitration commenced pursuant to this Section 14
shall be conducted in all respects as a de novo trial, or arbitration, on the
merits and Indemnitee shall not be prejudiced by reason of that adverse
determination. In any judicial proceeding or arbitration commenced pursuant to
this Section 14, Indemnitee shall be presumed to be entitled to
indemnification under this Agreement and the Company shall have the burden of
proving Indemnitee is not entitled to indemnification or advancement of
Expenses, as the case may be, and the Company may not refer to or introduce
into evidence any determination pursuant to Section 12(a) of this
Agreement adverse to Indemnitee for any purpose. If Indemnitee commences a
judicial proceeding or arbitration pursuant to this Section 14, Indemnitee
shall not be required to reimburse the Company for any advances pursuant to
Section 10 until a final determination is made with respect to Indemnitee’s
entitlement to indemnification (as to which all rights of appeal have been
exhausted or lapsed).

(c)           If
a determination shall have been made pursuant to Section 12(a) of this
Agreement that Indemnitee is entitled to indemnification, the Company shall be
bound by such determination in any judicial proceeding or arbitration commenced
pursuant to this Section 14, absent (i) a misstatement by Indemnitee
of a material fact, or an omission of a material fact necessary to make
Indemnitee’s statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification
under applicable law.

 9
 

(d)           The
Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 14 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court or before any such arbitrator that the Company is
bound by all the provisions of this Agreement.

(e)           The
Company shall indemnify and hold harmless Indemnitee to the fullest extent
permitted by law against all Expenses and, if requested by Indemnitee, shall
(within ten (10) days after the Company’s receipt of such written request)
advance to Indemnitee, to the fullest extent permitted by applicable law, such
Expenses which are incurred by Indemnitee in connection with any judicial
proceeding or arbitration brought by Indemnitee (i) to enforce his rights
under, or to recover damages for breach of, this Agreement or any other
indemnification, advancement or contribution agreement or provision of the
Charter, or the Company’s Bylaws now or hereafter in effect; or (ii) for
recovery or advances under any insurance policy maintained by any person for
the benefit of Indemnitee, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance, contribution or
insurance recovery, as the case may be.

(f)            Interest
shall be paid by the Company to Indemnitee at the legal rate under Delaware law
for amounts which the Company indemnifies or is obliged to indemnify for the
period commencing with the date on which Indemnitee requests indemnification, contribution,
reimbursement or advancement of any Expenses and ending with the date on which
such payment is made to Indemnitee by the Company.

15.           Establishment
of Trust.  In the event of a
Potential Change in Control, the Company shall, upon written request by
Indemnitee, create a “Trust” for the benefit of Indemnitee and from time to
time upon written request of Indemnitee shall fund such Trust in an amount
sufficient to satisfy any and all Expenses reasonably anticipated at the time
of each such request to be incurred in connection with investigating, preparing
for, participating in or defending any Proceedings, and any and all judgments,
fines, penalties and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or in respect
of such judgments, fines penalties and amounts paid in settlement) in
connection with any and all Proceedings from time to time actually paid or
claimed, reasonably anticipated or proposed to be paid. The trustee of the Trust
(the “Trustee”) shall be a bank or trust company or other individual or
entity chosen by Indemnitee and reasonably acceptable to the Company. Nothing
in this Section 15 shall relieve the Company of any of its obligations
under this Agreement. The amount or amounts to be deposited in the Trust
pursuant to the foregoing funding obligation shall be determined by mutual
agreement of Indemnitee and the Company or, if the Company and Indemnitee are
unable to reach such an agreement, by Independent Counsel selected in
accordance with Section 12(b) of this Agreement. The terms of the Trust
shall provide that, except upon the consent of both Indemnitee and the Company,
upon a Change in Control: (a) the Trust shall not be revoked or the
principal thereof invaded, without the written consent of Indemnitee;
(b) the Trustee shall advance, to the fullest extent permitted by
applicable law, within two (2) business days of a request by Indemnitee
and upon the execution and delivery to the Company of an undertaking providing
that Indemnitee undertakes to repay the advance to the extent that it is
ultimately determined that Indemnitee is not entitled to be indemnified by the
Company, any and all Expenses to Indemnitee; (c) the Trust shall continue
to be funded by the Company in accordance with the funding obligations set
forth above; (d) the Trustee shall promptly pay to Indemnitee all amounts
for which Indemnitee shall be entitled to indemnification pursuant to this
Agreement or otherwise; and (e) all unexpended funds in such Trust shall
revert to the Company upon mutual agreement by Indemnitee and the Company or,
if Indemnitee and the Company are unable to reach such an agreement, by
Independent Counsel selected in accordance with Section 12(b) of this
Agreement, that Indemnitee has been fully indemnified under the terms of this
Agreement. The Trust shall be governed by Delaware law (without regard to its
conflicts of laws rules) and the Trustee shall consent to the exclusive
jurisdiction of the Delaware Court in accordance with Section 23 of this
Agreement.

16.           Security.  Notwithstanding anything herein to the
contrary, to the extent requested by Indemnitee and approved by the Board, the
Company may at any time and from time to time provide security to Indemnitee
for the Company’s obligations hereunder through an irrevocable bank line of
credit, funded trust or other collateral. Any such security, once provided to Indemnitee,
may not be revoked or released without the prior written consent of Indemnitee.

 10
 

17.           Non-Exclusivity;
Survival of Rights; Insurance; Subrogation

(a)           The
rights of indemnification and to receive advancement of Expenses as provided by
this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may at any time be entitled under applicable law, the Charter, the
Company’s Bylaws, any agreement, a vote of stockholders or a resolution of
directors, or otherwise. No amendment, alteration or repeal of this Agreement
or of any provision hereof shall limit or restrict any right of Indemnitee
under this Agreement in respect of any action taken or omitted by such
Indemnitee in his Corporate Status prior to such amendment, alteration or
repeal. To the extent that a change in applicable law, whether by statute or
judicial decision, permits greater indemnification or advancement of Expenses
than would be afforded currently under the Charter, the Company’s Bylaws or
this Agreement, it is the intent of the parties hereto that Indemnitee shall
enjoy by this Agreement the greater benefits so afforded by such change. No
right or remedy herein conferred is intended to be exclusive of any other right
or remedy, and every other right and remedy shall be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other right or remedy.

(b)           The
DGCL, the Charter and the Company’s Bylaws permit the Company to purchase and
maintain insurance or furnish similar protection or make other arrangements
including, but not limited to, providing a trust fund, letter of credit, or
surety bond (“Indemnification Arrangements”) on behalf of Indemnitee
against any liability asserted against him or incurred by or on behalf of him
or in such capacity as a director, officer, employee or agent of the Company,
or arising out of his status as such, whether or not the Company would have the
power to indemnify him against such liability under the provisions of this
Agreement or under the DGCL, as it may then be in effect. The purchase,
establishment, and maintenance of any such Indemnification Arrangement shall
not in any way limit or affect the rights and obligations of the Company or of Indemnitee
under this Agreement except as expressly provided herein, and the execution and
delivery of this Agreement by the Company and Indemnitee shall not in any way
limit or affect the rights and obligations of the Company or the other party or
parties thereto under any such Indemnification Arrangement.

(c)           To
the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, trustees, partners, managing
members, fiduciaries, employees, or agents of the Company or of any other
Enterprise which such person serves at the request of the Company, Indemnitee
shall be covered by such policy or policies in accordance with its or their
terms to the maximum extent of the coverage available for any such director,
officer, trustee, partner, managing member, fiduciary, employee or agent under
such policy or policies. If, at the time the Company receives notice from any
source of a Proceeding as to which Indemnitee is a party or a participant (as a
witness or otherwise), the Company has director and officer liability insurance
in effect, the Company shall give prompt notice of such Proceeding to the
insurers in accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary or desirable action
to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as
a result of such Proceeding in accordance with the terms of such policies.

(d)           In
the event of any payment under this Agreement, the Company shall be subrogated
to the extent of such payment to all of the rights of recovery of Indemnitee,
who shall execute all papers required and take all action necessary to secure
such rights, including execution of such documents as are necessary to enable
the Company to bring suit to enforce such rights.

(e)           The
Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee
who is or was serving at the request of the Company as a director, officer,
trustee, partner, managing member, fiduciary, employee or agent of any other
Enterprise shall be reduced by any amount Indemnitee has actually received as
indemnification or advancement of expenses from such Enterprise.

18.           Duration
of Agreement.  All agreements and
obligations of the Company contained herein shall continue during the period
Indemnitee serves as a director or officer of the Company or as a director,
officer, trustee, partner, managing member, fiduciary, employee or agent of any
other corporation, partnership, joint venture, trust, employee benefit plan or
other Enterprise which Indemnitee serves at the request of the Company and
shall continue thereafter so long as Indemnitee shall be subject to any
possible Proceeding (including any rights of appeal thereto and any Proceeding
commenced by Indemnitee pursuant to Section 14 of this Agreement) by
reason of his 

 11
 

Corporate
Status, whether or not he is acting in any such capacity at the time any
liability or expense is incurred for which indemnification can be provided
under this Agreement.

19.           Severability.  If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of
any Section, paragraph or sentence of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby and shall remain enforceable to the fullest extent permitted by law;
(b) such provision or provisions shall be deemed reformed to the extent
necessary to conform to applicable law and to give the maximum effect to the intent
of the parties hereto; and (c) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, each portion of
any Section, paragraph or sentence of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.

20.           Enforcement
and Binding Effect

(a)           The
Company expressly confirms and agrees that it has entered into this Agreement
and assumed the obligations imposed on it hereby in order to induce Indemnitee
to serve as a director or officer of the Company, and the Company acknowledges
that Indemnitee is relying upon this Agreement in serving as a director or
officer of the Company.

(b)           Without
limiting any of the rights of Indemnitee under the Charter or Bylaws of the
Company as they may be amended from time to time, this Agreement constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings, oral,
written and implied, between the parties hereto with respect to the subject
matter hereof. If the DGCL or any other applicable law is amended after the
date hereof to permit the Company to indemnify Indemnitee for Expenses or
liabilities, or to indemnify Indemnitee with respect to any action or
Proceeding, not contemplated by this Agreement, then this Agreement (without
any further action by either party hereto) shall automatically be deemed to be
amended to require that the Company indemnify Indemnitee to the fullest extent
permitted by the DGCL.

(c)           The
indemnification and advancement of expenses provided by or granted pursuant to
this Agreement shall be binding upon and be enforceable by the parties hereto
and their respective successors and assigns (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), shall continue as
to an Indemnitee who has ceased to be a director, officer, employee or agent of
the Company or of any other Enterprise at the Company’s request, and shall
inure to the benefit of Indemnitee and his spouse, assigns, heirs, devisees,
executors and administrators and other legal representatives.

(d)           The
Company shall require and cause any successor (whether direct or indirect by
purchase, merger, consolidation or otherwise) to all, substantially all or a
substantial part, of the business and/or assets of the Company, by written
agreement in form and substance satisfactory to Indemnitee, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken
place.

(e)           The
Company and Indemnitee agree herein that a monetary remedy for breach of this
Agreement, at some later date, may be inadequate, impracticable and difficult
of proof, and further agree that such breach may cause Indemnitee irreparable
harm. Accordingly, the parties hereto agree that Indemnitee may enforce this
Agreement by seeking injunctive relief and/or specific performance hereof,
without any necessity of showing actual damage or irreparable harm and that by
seeking injunctive relief and/or specific performance, Indemnitee shall not be
precluded from seeking or obtaining any other relief to which he may be
entitled. The Company and Indemnitee further agree that Indemnitee shall be
entitled to such specific performance and injunctive relief, including temporary
restraining orders, preliminary injunctions and permanent injunctions, without
the necessity of posting bonds or other undertaking in connection therewith.
The Company acknowledges that in the absence of a waiver, a bond or undertaking
may be required of Indemnitee by the court, and the Company hereby waives any
such requirement of such a bond or undertaking.

 12
 

21.           Modification
and Waiver.  No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
of this Agreement nor shall any waiver constitute a continuing waiver.

22.           Notices.  All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (i) if delivered by hand and receipted for by the
party to whom said notice or other communication shall have been directed, or
(ii) mailed by certified or registered mail with postage prepaid, on the
third (3rd) business day after the date on which it is so mailed:

(a)           If
to Indemnitee, at the address indicated on the signature page of this
Agreement, or such other address as Indemnitee shall provide in writing to the
Company.

(b)           If
to the Company, to:

Farmer Bros. Co.

20333 South Normandie Avenue 

Torrance, CA 90502

Attention: Corporate Secretary

or to any other address as may have been furnished to
Indemnitee in writing by the Company.

23.           Applicable
Law and Consent to Jurisdiction. This
Agreement and the legal relations among the parties shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
without regard to its conflict of laws rules. Except with respect to any
arbitration commenced by Indemnitee pursuant to Section 14(a) of this
Agreement, the Company and Indemnitee hereby irrevocably and unconditionally:
(a) agree that any action or proceeding arising out of or in connection
with this Agreement shall be brought only in the Delaware Court and not in any
other state or federal court in the United States of America or any court in
any other country; (b) consent to submit to the exclusive jurisdiction of
the Delaware Court for purposes of any action or proceeding arising out of or
in connection with this Agreement; (c) appoint irrevocably, to the extent
such party is not a resident of the State of Delaware, RL&F Service Corp.,
One Rodney Square, 10th Floor, 10th and King Streets, P.O. Box 551, Wilmington,
Delaware 19899 as its agent in the State of Delaware as such party’s agent for
acceptance of legal process in connection with any such action or proceeding
against such party with the same legal force and validity as if served upon
such party personally within the State of Delaware; (d) waive any
objection to the laying of venue of any such action or proceeding in the
Delaware Court; and (e) waive, and agree not to plead or to make, any
claim that any such action or proceeding brought in the Delaware Court has been
brought in an improper or inconvenient forum, or is subject (in whole or in
part) to a jury trial.

24.           Counterparts.        This Agreement may be
executed in one or more counterparts, each of which shall for all purposes be
deemed to be an original but all of which together shall constitute one and the
same Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.

25.           Miscellaneous.  Use of the masculine pronoun shall be deemed
to include usage of the feminine pronoun where appropriate. The headings of the
paragraphs of this Agreement are inserted for convenience only and shall not be
deemed to constitute part of this Agreement or to affect the construction
thereof.

[SIGNATURE PAGE FOLLOWS]

 13
 

IN
WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the
day and year first above written.

	
  FARMER BROS. CO.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  INDEMNITEE

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
				

 

 14
 

SCHEDULE OF INDEMNITEES

John M. Anglin

Guenter W. Berger

Kenneth R. Carson

Lewis A. Coffman

Michael J. King

Roger M. Laverty III

Thomas A. Maloof

James J. McGarry

John H. Merrell

John Samore, Jr.

John E. Simmons

Carol Farmer Waite

 15Exhibit
10.3

FORM OF AWARD
LETTER

UNDER FARMER BROS. CO.

2005 INCENTIVE COMPENSATION PLAN

Dear                      :

The Compensation
Committee (“Committee”) chose you to be a participant in fiscal 2007 in the
Farmer Bros. Co. 2005 Incentive Compensation Plan.  Your target award for fiscal 2007 was $                 ,
which the Committee determined by taking into consideration past total annual
compensation, current base salary, job responsibilities and past and expected
job performance.

In general, your bonus
for fiscal 2007 was determined primarily by measuring the Company’s financial
performance and your achievement of individual goals which the Committee
assigned to you.

The Company’s
financial performance was gauged by the level of achievement of operating cash
flow and net sales as determined from the Company’s audited financial
statements.  “Operating cash flow” is
defined as income from operations plus depreciation and ESOP compensation
expense.  A matrix is attached which
shows various percentages between 25% and 150% depending on the combined level
of achievement of these two criteria. 
For fiscal 2007, the Company’s operating cash flow was approximately $                 ,
disregarding a charge related to the retiree benefit plan modification, and net
sales were approximately $                 .  Both numbers exclude Coffee Bean
International revenues and most CBI acquisition expenses.  Based on the Company’s achievement of these
two criteria during fiscal 2007, the percentage derived from the matrix for fiscal
2007 is                  %.

The Committee also
assigned certain individual goals to you for fiscal 2007 which were
communicated to you by the Committee at the beginning of the last fiscal
year.  The Committee has determined your
level of achievement of each assigned goal within a range of 60% to 120% and
multiplied such percentage by the weight originally assigned to each such
goal.  Your assigned individual goals for
fiscal 2007, the weight given to each expressed as a percentage, and your level
of achievement as determined by the Committee are as follows:

	
  Goal

  	
   

  	
  % Weight

  	
   

  	
  % Achievement

  	
   

  	
  Weighted Result

  	
   

  
	
     

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
  %

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
  %

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
  %

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
   

  	
   

  	
  100%

  	
   

  	
   

  	
   

  

 

The level of
achievement of each goal on a weighted basis were aggregated and multiplied by                  %,
the financial performance percentage derived from the matrix as described
above.  The resulting product was then
multiplied by your fiscal 2007 target award to determine your preliminary bonus
award for fiscal 2007.  Based on the
foregoing, the Committee has determined your fiscal 2007 preliminary
bonus award is $                 .

Under the Plan,
the preliminary award is subject to adjustment, upward or downward, by the
Committee in its discretion.  The
committee also has the discretion to alter the financial performance criteria
and individual goals during the year and to decline to award any bonus should
the committee determine such actions to be warranted by a change in circumstances.  For fiscal 2007 the Committee has determined
to exercise its discretion to adjust your preliminary bonus award principally
in light of the efforts of the management team in making the CBI acquisition
and the post-acquisition integration of CBI into Farmer Bros. in which you
played a [substantial] part.  As a
result, your fiscal 2007 final bonus
award will be $                 .

You are
advised that the Committee may or may not choose to exercise its discretion
with respect to awards in the future. 
Further, you are reminded to promptly contact the Committee in the event
circumstances dictate reexamination of originally assigned goals by the
Committee.

The Committee has
determined that the award will be paid on a current basis under the Plan.  All awards are governed by the Plan
provisions which control any inconsistency with this letter.

Please let me know
if you have any questions.

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Thomas A. Maloof

  
	
   

  	
  Compensation
  Committee Chairman

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