Document:

Exhibit 4.01

 

SUPPLEMENTAL
INDENTURE NO. 3

 

FROM

 

XCEL
ENERGY INC.

(a
Minnesota corporation)

 

TO

 

WELLS
FARGO BANK, NATIONAL ASSOCIATION

Trustee

 

 

DATED AS OF

June 1, 2006

 

 

SUPPLEMENTAL TO INDENTURE

DATED AS OF DECEMBER 1, 2000

 

TABLE OF
CONTENTS

	
  Parties

  	
  1

  
	
  Recitals

  	
  1

  
	
   

  	
   

  
	
  ARTICLE ONE

  	
   

  
	
  RELATION TO INDENTURE; DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  SECTION 1.01

  	
  Integral Part of Indenture

  	
  2

  
	
  SECTION 1.02

  	
  (a)

  	
  Definitions

  	
  2

  
	
   

  	
  (b)

  	
  References to Articles and Sections

  	
  2

  
	
   

  	
  (c)

  	
  Terms Referring to this
  Supplemental Indenture

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE TWO

  	
   

  
	
  6.50% SENIOR NOTES, SERIES DUE 2036

  	
   

  
	
   

  	
   

  
	
  SECTION 2.01

  	
  Designation and Principal Amount

  	
  2

  
	
  SECTION 2.02

  	
  Stated Maturity Date

  	
  2

  
	
  SECTION 2.03

  	
  Interest Payment Dates

  	
  2

  
	
  SECTION 2.04

  	
  Office for Payment

  	
  2

  
	
  SECTION 2.05

  	
  Redemption Provisions

  	
  2

  
	
  SECTION 2.06

  	
  Authorized Denominations

  	
  4

  
	
  SECTION 2.07

  	
  Form of 6.50% Senior Notes, Series
  Due 2036

  	
  4

  
	
  SECTION 2.08

  	
  Reopening of Notes

  	
  4

  
	
   

  	
   

  
	
  ARTICLE THREE

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  SECTION 3.01

  	
  Recitals of fact, except as stated,
  are statements of the Company

  	
  4

  
	
  SECTION 3.02

  	
  Supplemental Indenture to be
  construed as a part of the Indenture

  	
  4

  
	
  SECTION 3.03

  	
  (a)

  	
  Trust Indenture Act to control

  	
  4

  
	
   

  	
  (b)

  	
  Severability of provisions
  contained in

  	
   

  
	
   

  	
   

  	
  Supplemental Indenture and Notes

  	
  4

  
	
  SECTION 3.04

  	
  Reference to either party in
  Supplemental Indenture include successors or assigns

  	
  4

  
	
  SECTION 3.05

  	
  (a)

  	
  Provision for execution in
  counterparts

  	
  5

  
	
   

  	
  (b)

  	
  Table of Contents and descriptive
  headings of

  	
   

  
	
   

  	
   

  	
  Articles not to affect meaning

  	
  5

  
	
   

  	
   

  
	
  Exhibit A — Form of 6.50% Senior Notes, Series due 2036

  	
   

  

 

 

i

 

SUPPLEMENTAL
INDENTURE No. 3, made as of the 1st day of June,
2006, by and between XCEL ENERGY INC., a corporation duly organized and
existing under the laws of the State of Minnesota (the “Company”), and WELLS
FARGO BANK, NATIONAL ASSOCIATION, a national banking association organized and
existing under the laws of the United States, as trustee (the “Trustee”):

 

WITNESSETH:

 

WHEREAS, the Company has heretofore executed and
delivered its Indenture (hereinafter referred to as the “Indenture”), made as
of December 1, 2000; and

 

WHEREAS, Section 2.5 of the Indenture provides
that Securities shall be issued in series and that a Company Order shall
specify the terms of each series; and

 

WHEREAS, the Company has this day delivered a
Company Order setting forth the terms of a series of Securities designated “6.50% Senior Notes, Series due 2036” (hereinafter sometimes referred to as the
“Notes due 2036”); and

 

WHEREAS, Section 12.1 of the Indenture provides
that the Company and the Trustee may enter into indentures supplemental thereto
for the purposes, among others, of establishing the form of Securities or
establishing or reflecting any terms of any Security and adding to the
covenants of the Company; and

 

WHEREAS, the execution and delivery of this
Supplemental Indenture No. 3 (herein, “this Supplemental Indenture”) have been
duly authorized by a resolution or written consent adopted by the Board of
Directors of the Company;

 

NOW,
THEREFORE, THIS INDENTURE WITNESSETH:

 

That in order to
set forth the terms and conditions upon which the Notes due 2036 are, and are to be, authenticated, issued
and delivered, and in consideration of the premises of the purchase and
acceptance of the Notes due 2036 by the
Holders thereof and the sum of one dollar duly paid to it by the Trustee at the
execution of this Supplemental Indenture, the receipt whereof is hereby
acknowledged, the Company covenants and agrees with the Trustee for the equal
and proportionate benefit of the respective Holders from time to time of the
Notes due 2036, as follows:

 

1

 

ARTICLE
ONE

RELATION
TO INDENTURE; DEFINITIONS

 

SECTION 1.01.            This
Supplemental Indenture constitutes an integral part of the Indenture.

 

SECTION 1.02.            For
all purposes of this Supplemental Indenture:

 

(a)                                Capitalized terms used herein without
definition shall have the meanings specified in the Indenture;

 

(b)                               All references herein to Articles and
Sections, unless otherwise specified, refer to the corresponding Articles and
Sections of this Supplemental Indenture; and

 

(c)                                The terms “hereof,” “herein,” “hereby,” “hereto,”
“hereunder” and “herewith” refer to this Supplemental Indenture.

 

ARTICLE
TWO

6.50% SENIOR NOTES, SERIES DUE 2036

 

SECTION 2.01.            There
shall be a series of Securities designated the “6.50%
Senior Notes, Series due 2036” (the “Notes
due 2036”). The Notes due 2036 shall be limited to $300,000,000 aggregate
principal amount except as provided in Section 2.08.

 

SECTION 2.02.            Except
as otherwise provided in Section 2.05 hereof, the principal amount of the Notes
due 2036 shall be payable on the stated
maturity date of July 1, 2036.

 

SECTION 2.03.            The
Notes due 2036 shall be dated their date
of authentication as provided in the Indenture and shall bear interest from
their date at the rate of 6.50% per
annum, payable semi-annually on January 1
and July 1 of each year, commencing January 1, 2007. The Regular Record Dates with
respect to such January 1 and July 1 interest payment dates shall be December 15 and June 15, respectively.
Principal and interest shall be payable to the persons and in the manner
provided in Sections 2.4 and 2.12 of the Indenture.

 

SECTION 2.04.            The
Notes due 2036 shall be payable at the
corporate trust office of the Trustee and at the offices of such paying agents
as the Company may appoint by Company Order in the future.

 

SECTION 2.05.            The
Company may redeem the Notes due 2036 at
any time, in whole or in part, at a “make whole” redemption price equal to the
greater of (i) the principal amount of such Notes due 2036 being redeemed or (ii) the sum of the present values of the remaining
scheduled payments of principal and interest on the notes being redeemed,
discounted to the redemption date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury Yield (as defined
below) plus 25 basis points, plus accrued interest to the date of redemption.

 

2

 

                “Treasury Yield”
means, for any redemption date, (1) the yield, under the heading which
represents the average for the immediately preceding week, appearing in the
most recently published statistical release designated “H.15(519)” or any
successor publication which is published weekly by the Board of Governors of
the Federal Reserve System and which establishes yields on actively traded U.S.
Treasury securities adjusted to constant maturity under the caption “Treasury
Constant Maturities,” for the maturity corresponding to the Comparable Treasury
Issue (if no maturity is within three months before or after the remaining term,
yields for the two published maturities most closely corresponding to the
Comparable Treasury Issue will be determined and the Treasury Yield will be
interpolated or extrapolated from such yields on a straight line basis,
rounding to the nearest month); or (2) if such release (or any successor
release) is not published during the week preceding the calculation date or
does not contain such yields, the rate per annum equal to the semiannual
equivalent yield to maturity of the Comparable Treasury Issue, calculated using
a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such redemption
date.  The Treasury Yield will be
calculated on the third business day preceding the date fixed for redemption.

 

                “Comparable
Treasury Issue” means the U.S. Treasury security selected by an Independent
Investment Banker as having a maturity comparable to the remaining term of the
Notes due 2036 that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
notes.

 

                “Comparable
Treasury Price” means (1) the average of the Reference Treasury Dealer
Quotations for the redemption date, after excluding the highest and lowest
Reference Treasury Dealer Quotations for the redemption date, or (2) if the Trustee
obtains fewer than four Reference Treasury Dealer Quotations, the average of
all of the quotations.

 

                “Independent
Investment Banker” means Goldman, Sachs & Co., Lehman Brothers Inc. or
Morgan Stanley & Co. Incorporated or their respective successors or, if
such firms or their successors are unwilling or unable to select the Comparable
Treasury Issue, an independent investment banking institution of national
standing appointed by the Trustee after consultation with the Company.

 

                “Reference
Treasury Dealer” means (1) Goldman, Sachs & Co., Lehman Brothers Inc. or
Morgan Stanley & Co. Incorporated and any other primary U.S. Government
securities dealer in New York City (a “Primary Treasury Dealer”) designated by,
and not affiliated with, Goldman, Sachs & Co., Lehman Brothers Inc. or
Morgan Stanley & Co. Incorporated and their respective successors,
provided, however, that if Goldman, Sachs & Co., Lehman Brothers Inc. or
Morgan Stanley & Co. Incorporated or any of its designees ceases to be a
Primary Treasury Dealer, the Company will appoint another Primary Treasury
Dealer as a substitute and (2) any other Primary Treasury Dealer selected by the
Company after consultation with the Independent Investment Banker.

 

3

 

                “Reference
Treasury Dealer Quotations” means, for each Reference Treasury Dealer and any
redemption date, the average, as determined by the Independent Investment
Banker, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Independent Investment Banker by the Reference Treasury Dealer
at 5:00 p.m. on the third business day preceding the redemption date.

 

                The Notes due 2036 shall
not be subject to any sinking fund.

 

SECTION 2.06.            The
Notes due 2036 shall be issued in fully
registered form without coupons in denominations of $1,000 and integral
multiples thereof.

 

SECTION 2.07.            The
Notes due 2036 shall initially be in the
form attached as Exhibit A hereto.

 

SECTION 2.08             The
Notes due 2036 may be reopened and additional notes of the Notes due 2036 may
be issued in excess of the limitation set forth in Section 2.01, provided that
such additional notes will contain the same terms (including the stated maturity
date and interest rate) as the other Notes due 2036. Any such additional Notes
due 2036, together with the other Notes due 2036, shall constitute a single
series for purposes of the Indenture.

 

ARTICLE
THREE

MISCELLANEOUS

 

SECTION 3.01.            The
recitals of fact herein and in the Notes due 2036
(except the Trustee’s Certificate) shall be taken as statements of the Company
and shall not be construed as made by the Trustee.

 

SECTION 3.02.            This
Supplemental Indenture shall be construed in connection with and as a part of
the Indenture.

 

SECTION 3.03.

 

(a)                                If any provision of this Supplemental
Indenture limits, qualifies, or conflicts with another provision of the
Indenture required to be included in indentures qualified under the Trust
Indenture Act of 1939 (as enacted prior to the date of this Supplemental
Indenture) by any of the provisions of Sections 310 to 317, inclusive, of said
Act, such required provisions shall control.

 

(b)                               In case any one or more of the provisions
contained in this Supplemental Indenture or in the notes issued hereunder
should be invalid, illegal, or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected, impaired, prejudiced or disturbed
thereby.

 

SECTION 3.04.            Whenever
in this Supplemental Indenture either of the parties hereto is named or
referred to, this shall be deemed to include the successors or assigns of such 

 

4

 

party, and all the covenants and agreements in this
Supplemental Indenture contained by or on behalf of the Company or by or on
behalf of the Trustee shall bind and inure to the benefit of the respective
successors and assigns of such parties, whether so expressed or not.

 

SECTION 3.05.

 

(a)                                This Supplemental Indenture may be
simultaneously executed in several counterparts, and all said counterparts
executed and delivered, each as an original, shall constitute but one and the
same instrument.

 

(b)                               The Table of Contents and the descriptive
headings of the several Articles of this Supplemental Indenture were
formulated, used and inserted in this Supplemental Indenture for convenience
only and shall not be deemed to affect the meaning or construction of any of the
provisions hereof.

 

5

IN WITNESS
WHEREOF, XCEL ENERGY INC. has caused this Supplemental Indenture to be signed
by its President or a Vice President, and attested by its Secretary or an
Assistant Secretary and WELLS FARGO BANK, NATIONAL ASSOCIATION, has caused this
Supplemental Indenture to be signed by its President, Vice President, Assistant
Vice President or authorized Corporate Trust Officer, and attested by an
authorized officer, this 1st day of June, 2006.

 

 

	
   

  	
   

  	
  XCEL ENERGY INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ GEORGE E. TYSON II

  	
   

  
	
   

  	
   

  	
  Name: George E. Tyson II

  
	
   

  	
   

  	
  Title: Vice President and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ATTEST:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ PATRICE D. BLAESER

  	
   

  
	
   

  	
   

  	
  Name: Patrice D. Blaeser

  
	
   

  	
   

  	
  Title: Assistant Corporate Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WELLS FARGO BANK,

  
	
   

  	
   

  	
  NATIONAL ASSOCIATION, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ MICHAEL T. LECHNER

  	
   

  
	
   

  	
   

  	
  Name: Michael T. Lechner

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ATTEST:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ ROBERT M. SELANGOWSKI

  	
   

  
	
   

  	
   

  	
  Name: Robert M. Selangowski

  
	
   

  	
   

  	
  Title: Vice President

  

 

6

 

EXHIBIT
A

FORM OF

6.50% SENIOR NOTES, SERIES DUE 2036

 

REGISTERED

 

THIS NOTE IS A
GLOBAL SECURITY REGISTERED IN THE NAME OF THE DEPOSITORY (REFERRED TO HEREIN)
OR A NOMINEE THEREOF AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
FOR THE INDIVIDUAL NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY
OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY
OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS GLOBAL SECURITY IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55
WATER STREET, NEW YORK, NEW YORK), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

 

XCEL
ENERGY INC.

(Incorporated
under the laws of the State of Minnesota)

6.50% SENIOR NOTE, SERIES DUE 2036

 

	
  CUSIP: 98389B AH 3

  	
  NUMBER:

  
	
   

  	
   

  
	
  ORIGINAL ISSUE DATE(S):

  	
  PRINCIPAL AMOUNT(S):

  
	
   

  	
  $

  
	
   

  	
   

  
	
  INTEREST RATE: 6.50%

  	
  MATURITY DATE: July
  1, 2036

  

 

XCEL ENERGY INC.,
a corporation of the State of Minnesota (the “Company”), for value received
hereby promises to pay to Cede & Co. or registered assigns, the principal
sum of
                    
DOLLARS on the Maturity Date set forth above, and to pay interest thereon from
the Original Issue Date (or if this Global Security has two or more Original
Issue Dates, interest shall, beginning on each such Original Issue Date, begin
to accrue for that part of the principal amount to which that Original Issue
Date is applicable) set forth above or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, semiannually in
arrears on the January 1  and July 1
in each year, commencing January 1, 2007, at the per annum Interest Rate set
forth above, until the principal hereof is paid or made available for payment. No

 

A-1

 

interest
shall accrue on the Maturity Date, so long as the principal amount of this
Global Security is paid on the Maturity Date. The interest so payable and
punctually paid or duly provided for on any such Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Note is
registered at the close of business on the Regular Record Date for such
interest, which shall be the December 15
or June 15, as the case may be, next preceding such Interest Payment Date;
provided, that the first Interest Payment Date for any part of this Note, the
Original Issue Date of which is after a Regular Record Date but prior to the
applicable Interest Payment Date, shall be the Interest Payment Date following
the next succeeding Regular Record Date; and provided, that interest payable on
the Maturity Date set forth above or, if applicable, upon redemption or
acceleration, shall be payable to the Person to whom principal shall be
payable. Except as otherwise provided in the Indenture (as defined below), any
such interest not so punctually paid or duly provided for will forthwith cease
to be payable to the Holder on such Regular Record Date and shall be paid to
the Person in whose name this Note is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice whereof shall be given to Securityholders not more than
fifteen days or fewer than ten days prior to such Special Record Date. On or
before Noon, New York City time, or such other time as shall be agreed upon
between the Trustee and the Depository, of the day on which such payment of
interest is due on this Global Security (other than maturity), the Trustee
shall pay to the Depository such interest in same day funds. On or before 11:30
a.m., New York City time, or such other time as shall be agreed upon between
the Trustee and the Depository, of the day on which principal, interest payable
at maturity and premium, if any, is due on this Global Security and following
receipt of the necessary funds from the Company, the Trustee shall deposit with
the Depository the amount equal to the principal, interest payable at maturity
and premium, if any, by wire transfer into the account specified by the
Depository. As a condition to the payment, on the Maturity Date or upon
redemption or acceleration, of any part of the principal and applicable premium
of this Global Security, the Depository shall surrender, or cause to be
surrendered, this Global Security to the Trustee, whereupon a new Global
Security shall be issued to the Depository.

 

This Global
Security is a global security in respect of a duly authorized issue of Senior
Notes, Series due 2036 (the “Notes of
this Series,” which term includes any Global Securities representing such
Notes) of the Company issued and to be issued under an Indenture dated as of
December 1, 2000 between the Company and Wells Fargo Bank, National
Association, as trustee (herein called the “Trustee,” which term includes any
successor Trustee under the Indenture) and indentures supplemental thereto
(collectively, the “Indenture”). Under the Indenture, one or more series of
Securities may be issued and, as used herein, the term “Securities” refers to
the Notes of this Series and any other outstanding series of Securities.
Reference is hereby made to the Indenture for a more complete statement of the
respective rights, limitations of rights, duties and immunities under the
Indenture of the Company, the Trustee and the Securityholders and of the terms
upon which the Securities are and are to be authenticated and delivered. This
Global Security has been issued in respect of the series designated on the
first page hereof.

 

Each Note of this
Series shall be dated and issued as of the date of its authentication by the
Trustee and shall bear an Original Issue Date or Dates. Each Security or Global
Security issued upon transfer, exchange or substitution of such Security or
Global Security shall bear the Original Issue Date or Dates of such
transferred, exchanged or substituted Security or Global Security, as the case
may be.

 

A-2

 

The
Company may redeem the Notes due 2036 at
any time, in whole or in part, at a “make whole” redemption price equal to the
greater of (i) the principal amount of such Notes due 2036 being redeemed or (ii) the sum of the present values of the remaining
scheduled payments of principal and interest on the notes being redeemed,
discounted to the redemption date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury Yield (as defined
below) plus 25 basis points, plus accrued interest to the date of redemption.

 

“Treasury Yield” means,
for any redemption date, (1) the yield, under the heading which represents the
average for the immediately preceding week, appearing in the most recently
published statistical release designated “H.15(519)” or any successor
publication which is published weekly by the Board of Governors of the Federal
Reserve System and which establishes yields on actively traded U.S. Treasury
securities adjusted to constant maturity under the caption “Treasury Constant
Maturities,” for the maturity corresponding to the Comparable Treasury Issue
(if no maturity is within three months before or after the remaining term,
yields for the two published maturities most closely corresponding to the
Comparable Treasury Issue will be determined and the Treasury Yield will be
interpolated or extrapolated from such yields on a straight line basis,
rounding to the nearest month); or (2) if such release (or any successor
release) is not published during the week preceding the calculation date or
does not contain such yields, the rate per annum equal to the semiannual
equivalent yield to maturity of the Comparable Treasury Issue, calculated using
a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such redemption
date.  The Treasury Yield will be
calculated on the third business day preceding the date fixed for redemption.

 

“Comparable Treasury
Issue” means the U.S. Treasury security selected by an Independent Investment
Banker as having a maturity comparable to the remaining term of the Notes due 2036 that
would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of the notes.

 

“Comparable Treasury
Price” means (1) the average of the Reference Treasury Dealer Quotations for
the redemption date, after excluding the highest and lowest Reference Treasury
Dealer Quotations for the redemption date, or (2) if the Trustee obtains fewer
than four Reference Treasury Dealer Quotations, the average of all of the
quotations.

 

“Independent Investment
Banker” means Goldman, Sachs & Co., Lehman Brothers Inc. or Morgan Stanley
& Co. Incorporated or their respective successors or, if such firms or
their successors are unwilling or unable to select the Comparable Treasury
Issue, an independent investment banking institution of national standing
appointed by the Trustee after consultation with the Company.

 

“Reference Treasury Dealer”
means (1) Goldman, Sachs & Co., Lehman Brothers Inc. or Morgan Stanley
& Co. Incorporated and any other primary U.S. Government securities dealer
in New York City (a “Primary Treasury Dealer”) designated by, and not
affiliated with, Goldman, Sachs & Co., Lehman Brothers Inc. or Morgan
Stanley & Co. 

 

A-3

 

Incorporated and
their respective successors, provided, however, that if Goldman, Sachs &
Co., Lehman Brothers Inc. or Morgan Stanley & Co. Incorporated or any of
its designees ceases to be a Primary Treasury Dealer, the Company will appoint
another Primary Treasury Dealer as a substitute and (2) any other Primary
Treasury Dealer selected by the Company after consultation with the Independent
Investment Banker.

 

“Reference Treasury
Dealer Quotations” means, for each Reference Treasury Dealer and any redemption
date, the average, as determined by the Independent Investment Banker, of the
bid and asked prices for the Comparable Treasury Issue (expressed in each case
as a percentage of its principal amount) quoted in writing to the Independent
Investment Banker by the Reference Treasury Dealer at 5:00 p.m. on the third
business day preceding the redemption date.

 

Notice
of redemption will be given by mail to Holders of Notes of this Series not less
than 30 or more than 60 days prior to the date fixed for redemption, all as
provided in the Indenture. In the event of redemption of this Global Security
in part only, a new Global Security or Securities of like tenor and series for
the unredeemed portion hereof will be issued in the name of the Securityholder
hereof upon the surrender hereof.

 

Interest payments
for this Global Security shall be computed and paid on the basis of a 360-day
year of twelve 30-day months. In any case where any Interest Payment Date or
date on which the principal of this Global Security is required to be paid is
not a Business Day, then payment of principal, premium or interest need not be
made on such date but may be made on the next succeeding Business Day with the
same force and effect as if made on such Interest Payment Date or date on which
the principal of this Global Security is required to be paid and, in the case
of timely payment thereof, no interest shall accrue for the period from and
after such Interest Payment Date or the date on which the principal of this
Global Security is required to be paid.

 

The Company, at
its option, and subject to the terms and conditions provided in the Indenture,
will be discharged from any and all obligations in respect of the Securities
(except for certain obligations including obligations to register the transfer
or exchange of Securities, replace stolen, lost or mutilated Securities,
maintain paying agencies and hold monies for payment in trust, all as set forth
in the Indenture) if the Company deposits with the Trustee money, U.S.
Government Obligations which through the payment of interest thereon and
principal thereof in accordance with their terms will provide money, or a
combination of money and U.S. Government Obligations, in any event in an amount
sufficient, without reinvestment, to pay all the principal of and any premium
and interest on the Securities on the dates such payments are due in accordance
with the terms of the Securities.

 

If an Event of
Default shall occur and be continuing, the principal of the Securities may be
declared due and payable in the manner and with the effect provided in the
Indenture.

 

The Indenture
permits, with certain exceptions as therein provided, the amendment thereof and
the modifications of the rights and obligations of the Company and the rights
of the Securityholders under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in
principal amount of the outstanding 

 

A-4

 

Securities.
Any such consent or waiver by the Holder of this Global Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Global Security and of any Note issued upon the registration of transfer hereof
or in exchange therefor or in lieu thereof whether or not notation of such
consent or waiver is made upon the Note.

 

As set forth in
and subject to the provisions of the Indenture, no Holder of any Securities
will have any right to institute any proceeding with respect to the Indenture
or for any remedy thereunder unless such Holder shall have previously given to
the Trustee written notice of a continuing Event of Default with respect to
such Securities, the Holders of not less than a majority in principal amount of
the outstanding Securities affected by such Event of Default shall have made
written request and offered reasonable indemnity to the Trustee to institute
such proceeding as Trustee and the Trustee shall have failed to institute such
proceeding within 60 days; provided, however, that such limitations do not
apply to a suit instituted by the Holder hereof for the enforcement of payment
of the principal of and any premium or interest on this Note on or after the
respective due dates expressed herein.

 

No reference
herein to the Indenture and to provisions of this Global Security or of the
Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and
interest on this Global Security at the times, places and rates and the coin or
currency prescribed in the Indenture.

 

As provided in the
Indenture and subject to certain limitations therein set forth, this Global Security
may be transferred only as permitted by the legend hereto.

 

If at any time the
Depository for this Global Security notifies the Company that it is unwilling
or unable to continue as Depository for this Global Security or if at any time
the Depository for this Global Security shall no longer be eligible or in good
standing under the Securities Exchange Act of 1934, as amended, or other
applicable statute or regulation, the Company shall appoint a successor
Depository with respect to this Global Security. If a successor Depository for
this Global Security is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such ineligibility, the
Company’s election to issue this Note in global form shall no longer be effective
with respect to this Global Security and the Company will execute, and the
Trustee, upon receipt of a Company Order for the authentication and delivery of
individual Notes of this Series in exchange for this Global Security, will
authenticate and deliver individual Notes of this Series of like tenor and
terms in definitive form in an aggregate principal amount equal to the
principal amount of this Global Security.

 

The Company may at
any time and in its sole discretion determine that all Notes of this Series
(but not less than all) issued or issuable in the form of one or more Global
Securities shall no longer be represented by such Global Security or
Securities. In such event, the Company shall execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of individual
Notes of this Series in exchange for such Global Security, shall authenticate
and deliver, individual Notes of this Series of like tenor and terms in
definitive form in an aggregate principal amount equal to the principal amount
of such Global Security or Securities in exchange for such Global Security or
Securities.

 

A-5

 

Under certain
circumstances specified in the Indenture, the Depository may be required to
surrender any two or more Global Securities which have identical terms (but
which may have differing Original Issue Dates) to the Trustee, and the Company
shall execute and the Trustee shall authenticate and deliver to, or at the
direction of, the Depository a Global Security in principal amount equal to the
aggregate principal amount of, and with all terms identical to, the Global
Securities surrendered thereto and that shall indicate all Original Issue Dates
and the principal amount applicable to each such Original Issue Date.

 

The Indenture and
the Securities shall be governed by, and construed in accordance with, the laws
of the State of Minnesota.

 

Unless the
certificate of authentication hereon has been executed by the Trustee, directly
or through an Authenticating Agent by manual signature of an authorized
officer, this Global Security shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

 

All terms used in
this Global Security which are defined in the Indenture shall have the meanings
assigned to them in the Indenture unless otherwise indicated herein.

 

A-6

 

IN WITNESS
WHEREOF, the Company has caused this instrument to be duly executed. 

 

Dated:

 

	
   

  	
  XCEL ENERGY INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ATTEST

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

TRUSTEE’S
CERTIFICATE

OF AUTHENTICATION

 

This Note is one of the Securities of the series herein designated,
described or provided for in the within-mentioned Indenture.

 

 

	
   

  	
  WELLS FARGO BANK,

  
	
   

  	
  NATIONAL ASSOCIATION, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  	
   

  

 

A-7

 

ABBREVIATIONS

 

The following
abbreviations, when used in the inscription on the face of this instrument,
shall be construed as though they were written out in full according to
applicable laws or regulations.

 

	
  TEN COM—as tenants in common

  	
  UNIF GIFT

  	
   

  	
   

  	
   

  
	
   

  	
  MIN ACT—

  	
   

  	
  Custodian

  	
   

  
	
   

  	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  

 

	
  TEN ENT—as tenants by the entireties

  	
  Under Uniform Gifts to Minors

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JT TEN—as joint tenants with right of

  	
   

  
	
  survivorship and not as tenants in common

  	
  State

  

 

 

Additional abbreviations
may also be

used though not in the
above list.

 

 

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

 

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

 

	
   

  

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE

 

 

	
   

  

the within security and all rights thereunder, hereby irrevocably
constituting and appointing                                    attorney to
transfer said security on the books of the Company, with full power of
substitution in the premises.

 

Dated:

 

NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.

 

A-8Exhibit 10.1

 

EMPLOYMENT AGREEMENT

(Farmer Bros. Co. / Laverty)

 

 

 

                This
Employment Agreement (“Agreement”) is made and entered into as of June 2, 2006
between FARMER BROS. CO., a Delaware corporation (the “Company”), and  ROGER M. LAVERTY III (“Laverty”) who agree as
follows:

 

                1.             Employment:  The Company hereby employs Laverty, and
Laverty accepts employment from the Company, on the terms and conditions herein
stated.

 

                2.             Term
of Employment:  The term of
Laverty’s employment under this Agreement will commence on July 24, 2006 or on
such other date as Laverty and the Company’s Chief Executive Officer (“CEO”) may
mutually agree (the “Commencement Date”) and shall end when terminated under
Section 7 below.

 

                3.             Duties:  Laverty shall serve as President and Chief
Operating Officer of the Company, reporting to the CEO.  As such his general responsibilities shall
include oversight responsibility for all day-to-day operations of the Company
with the exception of matters assigned to the Treasurer and Chief Financial
Officer, and with the exception of green coffee purchasing, risk management and
payroll until oversight of those latter operations is delegated to him by the
CEO.  In addition to his general
responsibilities, Laverty shall also perform such other duties as are
consistent with his position and as are directed by the Company’s CEO or Board
of Directors (“Board”).  Laverty shall
devote to the Company’s business substantially all of his working time.  The foregoing notwithstanding, Laverty may
continue to serve as a director of First Coastal Bank or its successor so long
as such service does not, in the reasonable judgment of the Board, adversely
affect the Company.  Service as a
director or equivalent of other for-profit organizations shall require approval
of the Board.

 

                4.             Base
Salary: Laverty shall receive an annual base salary of $320,000
payable in accordance with the Company’s normal payroll practice.  The annual base salary amount shall be
reviewed annually by the Company and can be adjusted upward or downward by the
Company from time to time but shall not be reduced below $320,000 per annum.  If Laverty is elected CEO in the future, the
Compensation Committee of the Board (“Compensation Committee”) will review
Laverty’s base salary promptly and make such upward adjustment as the
Compensation Committee determines in its discretion.

 

                5.             Bonuses:
 Laverty shall be entitled to participate
in the Company’s 2005 Incentive Compensation Plan or any successor plan (“Plan”)
each year so long as the Plan remains in effect and one or more of the Company’s
other executive officers who are full-time Company employees (“Senior
Executives”) also participate.  Under the
terms of the Plan, the Compensation Committee will, in its discretion, and
after consultation with Laverty, determine the Performance Criteria and all
other variables by which Laverty’s bonus for such year will be measured.  The Target Award, as defined in the Plan, shall
be an amount equal to fifty-seven percent (57%) of Laverty’s base annual salary
or such higher percentage as equals the percentage of Guenter W. Berger’s base
salary for such year represented by Mr. Berger’s Target Award under the Plan
for that year (whichever applies is herein called the “Applicable 

 

1

 

Percentage”). 
Accordingly, assuming the Commencement Date is July 24, 2006 and the Applicable
Percentage is 57%, the Target Amount for fiscal 2007 is $170,909 [$320,000 x
57% x 93.7% (i.e., 342 days divided by 365 days)].  Except as provided otherwise in this Section
5, Laverty’s participation in the Plan is subject to all Plan terms and
conditions. Under the terms of the Plan, no bonus is earned until awarded by
the Compensation Committee after completion of the fiscal year, and the Compensation
Committee may, in its discretion, reduce, entirely eliminate or increase the
bonus indicated by the Performance Criteria and other Plan factors.  Laverty acknowledges receipt of a copy of the
Plan.

 

6.             Benefits:
The Company will provide to Laverty all benefits and perquisites provided by
the Company from time to time to its Chief Executive Officer, subject to the
eligibility requirements and the terms and conditions of the benefit plans and
perquisite policies.  For the avoidance
of doubt, Laverty’s benefit package includes use of a Company car, commensurate
with the car provided to Mr. Berger, on the terms and conditions of the Company’s
policy on Company cars and not less than the same number of paid vacation days per
year to which Mr. Berger is entitled, pre-accrued for fiscal 2007, but
otherwise subject to the Company’s vacation policy.  Other included benefits and perquisites
presently consist of group health insurance (PPO or HMO), life insurance, key
person life insurance, business travel insurance, qualified retirement plan,
401(k) plan, employee stock ownership plan, cell phone, company credit card,
and expense reimbursement.  Not all of
the foregoing benefits are 100% Company paid.

 

                                The
Company reserves the right to alter or discontinue any or all such benefits and
perquisites, provided they are so altered or discontinued as to all Senior Executives
(including the CEO).

 

                                The
Compensation Committee will be considering a long term incentive plan for the Senior
Executives.  Laverty along with Mr. Berger
will have a leading role in management’s discussions with the Compensation
Committee concerning such a plan.  If a
plan is adopted, Laverty shall be entitled to participate in the plan in
accordance with the provisions thereof.

 

                7.             Termination:

 

                                A.            Laverty’s employment is terminable
by the Company for good and sufficient cause (“Cause”) which shall consist only
of (i) a repeated refusal to follow reasonable directions from the CEO or Board
after a warning; (ii) a material breach of any of Laverty’s fiduciary duties to
the Company (a breach involving dishonesty or personal gain shall be deemed
material regardless of the amount involved); (iii) conviction of a felony; (iv)
commission of a willful violation of any law, rule or regulation involving
moral turpitude; (v) commission of a willful or grossly negligent act or
omission which has a material adverse effect on the Company; or (vi) commission
of a material breach by Laverty of this Agreement which breach, if curable, is
not cured within a reasonable time after written notice from the CEO describing
the nature of the breach in reasonable detail.

 

                                B.            Laverty’s employment shall terminate
upon Laverty’s resignation, with or without “Good Reason,” as defined below, death
or permanent mental or physical incapacity. 
Permanent incapacity shall be deemed to have occurred if Laverty has
been 

 

2

 

unable to perform substantially all of his
employment duties under Section 3 on a substantially full time basis by reason
of a mental or physical condition for a period of ninety (90) consecutive days
or for more than one hundred eighty days (180) in any period of three hundred
sixty-five (365) consecutive days.

 

                                                “Good
Reason” shall consist only of (i) the Company’s material breach of this
Agreement which breach, if curable, is not cured within a reasonable time after
written notice of the breach describing the nature of the breach in reasonable
detail, (ii) downgrading of Laverty’s title or a material reduction in Laverty’s
responsibilities, (iii) a material reduction in, or elimination of,  the health care benefits provided to Laverty
or discontinuance of the qualified retirement plan or ESOP, (iv) relocation of
the Company’s executive offices more than fifty (50) miles from their present location,
(iv) the failure of the Company to adopt during calendar year 2007 a long term
incentive plan in which Laverty is eligible to participate on substantially the
same terms and conditions as are applicable to other Senior Executives or (v)
the failure of the Board to elect Laverty as the Company’s Chief Executive
Officer prior to January 1, 2008.

 

                                C.            Laverty’s employment shall terminate
at the election of the Company at any time without cause.

 

                8.             Payments
upon Termination:  The
following amounts are payable upon termination of Laverty’s employment, as
applicable:

 

                                A.            In the event of a termination for
any reason, base salary at the then existing rate, shall be prorated and paid
through the effective termination date, along with accrued and untaken vacation
(subject to the Company’s vacation policy). 
If termination is due to Laverty’s death or permanent incapacity, the
Company shall also pay to Laverty upon termination an additional lump sum
severance amount equal to the Target Award under the Company’s 2005 Incentive
Compensation Plan which is applicable to Laverty for the fiscal year in which
termination is effective or, if termination takes place before a Target Award
for the then current fiscal year has been assigned to Laverty, the Applicable
Percentage of Laverty’s then annual base salary, in either case prorated for
the partial fiscal year ending on the effective termination date.

 

                                B.            If termination occurs at the
election of the Company without Cause or by Laverty’s resignation with Good
Reason: Laverty will (i) continue to receive base salary at the then existing
rate as if he were still employed by the Company for a period of one (1) year
from the effective termination date, prorated for any partial payroll period at
the expiration of the one (1) year salary continuation period, (ii) receive partially
Company-paid COBRA coverage under the Company’s health care plan for himself
and his spouse for one (1) year after the effective termination date (the Company
will pay the same percentage of the coverage cost that it would have paid had
Laverty’s employment not terminated) and (iii) receive on the effective
termination date, an additional lump sum severance amount equal to the Target
Award under the Company’s 2005 Incentive Compensation Plan which is applicable
to Laverty for the fiscal year in which termination is effective or, if
termination takes place before a Target Award for the then current fiscal year
has been assigned to Laverty, the Applicable Percentage of Laverty’s then
annual base salary, in either case prorated for the partial fiscal year ending
on the effective termination date. 
Laverty is not 

 

3

 

obligated to seek other employment as a
condition to receipt of the payments called for by this Section 8B, and Laverty’s
earnings, income or profits from other employment or business activities after
termination of his employment shall not reduce the Company’s payment
obligations under this Section 8B.  Salary
continuation payments shall commence, and the additional severance amount shall
be paid, only when the release required by Section 8C below has become
effective.

 

                                C.            As a condition to receiving the
applicable payments under Section 8B above, Laverty must execute and deliver to
the Company a general release of claims against the Company other than claims
to the payments called for by this Agreement, such release to be in form and
content substantially as attached hereto as Exhibit A, and said release
shall have become effective under applicable laws, including the Age
Discrimination in Employment Act of 1967, as amended.

 

                                D.            All benefits other than the
entitlement to payments under Section 8B shall terminate automatically upon
termination of Laverty’s employment except to the extent otherwise provided in
the Company benefit plans or by law.

 

                                E.             Except as provided in this Section
8 or by applicable Company benefit plans or laws, Laverty shall not be entitled
to any payments of any kind in connection with the termination of his
employment by the Company.

 

                9.             Employee
Handbook and Company Policies: So long as he is employed by the
Company, Laverty shall comply with, and shall be entitled to rights as set
forth in the Company’s Employee Handbook which may be revised from time to time
and other Company policies as in effect and communicated to Laverty from time
to time.  In the event that there is a
conflict or contradiction between the contents of the Employee Handbook or
other such Company policies and the provisions of this Agreement, then the
provisions of this Agreement will prevail.

 

                10.           Confidential
Information, Intellectual Property:

 

                                A.            Laverty
acknowledges that during the course of his employment with the Company, he will
be given or will have access to non-public and confidential business
information of the Company which will include information concerning pending or
potential transactions, financial information concerning the Company,
information concerning the Company’s product formulas and processes, information
concerning the Company’s business plans and strategies, information concerning
Company personnel and vendors, and other non-public proprietary information of
the Company (all collectively called “Confidential Information”).  All of the Confidential Information
constitutes “trade secrets” under the Uniform Trade Secrets Act.  Laverty covenants and agrees that during and
after the term of his employment by the Company he will not disclose such
information or any part thereof to anyone outside the Company or use such
information for any purpose other than the furtherance of the Company’s
interests without the prior written consent of the CEO or Board.

 

                                B.  Laverty further covenants that for a period
of two (2) years after his employment by the Company terminates, he will not,
directly or indirectly, overtly or tacitly, 

 

4

 

induce, attempt to induce, solicit or
encourage (i) any customer or prospective customer of the Company to cease doing
business with, or not to do business with, the Company or (ii) any employee of
the Company to leave the Company.

 

                                C.  The Company and Laverty agree that the
covenants set forth in this Section 10 are reasonably necessary for the
protection of the Company’s Confidential Information and that a breach of the
foregoing covenants will cause the Company irreparable damage not compensable
by monetary damages, and that in the event of such breach or threatened breach,
at the Company’s election, an action may be brought in a court of competent
jurisdiction seeking a temporary restraining order and a preliminary injunction
against such breach or threatened breach notwithstanding the arbitration
provision of Section 12F below.  Upon the
court’s decision on the application for a preliminary injunction, the court
action shall be stayed and the remainder of the dispute submitted to
arbitration under Section 12F.  The
prevailing party in such legal action shall be entitled to recover its costs of
suit including reasonable attorneys’ fees.

 

                                D.            The Company shall own all rights in
and to the results, proceeds and products of Laverty’s services hereunder,
including without limitation, all ideas and intellectual property created or
developed by Laverty and which is related to Laverty’s employment.

 

                11.           Integration with Change in
Control Severance Agreement: 
If Laverty becomes eligible for benefits under Section 3 of the Change
in Control Severance Agreement executed concurrently herewith, the benefits
provided by Section 4 of that Agreement shall be in lieu of, and not in
addition to, the benefits provided by Section 8B of this Agreement.

 

                12.           Miscellaneous:

 

                                A.            This Agreement and the Change in Control
Severance Agreement and Indemnification Agreement entered into concurrently
herewith contain the entire agreement of the parties on the subject of Laverty’s
employment by the Company, all prior and contemporaneous agreements, promises
or understandings being merged herein. This Agreement can be modified only by a
writing signed by both parties hereto.

 

                                B.            Laverty cannot assign this Agreement
or delegate his duties hereunder. Subject to the preceding sentence, this
Agreement shall bind and inure to the benefit of the parties hereto, their
heirs, personal representatives, successors and assigns.

 

                                C.            No waiver of any provision or
consent to any exception to the terms of this Agreement shall be effective
unless in writing and signed by the party to be bound and then only to this
specific purpose, extent and instance so provided.  This Agreement may be executed in counterparts
(and by facsimile signature), each of which shall be deemed an original but all
of which together shall constitute one and the same agreement.

 

                                D.            Each party shall execute and deliver
such further instruments and take such other action as may be necessary or
appropriate to consummate the transactions herein contemplated and to carry out
the intent of the parties hereto.

 

5

 

                                E.             This Agreement shall be construed
in a fair and reasonable manner and not pursuant to any principle requiring
that ambiguities be strictly construed against the party who caused same to
exist.

 

                                F.             (i)            All
disputes arising under or in connection with this Agreement, shall be submitted
to a mutually agreeable arbitrator, or if the parties are unable to agree on an
arbitrator within fifteen (15) days after a written demand for arbitration is
made by either party, to JAMS/Endispute (“JAMS”) or successor organization, for
binding arbitration in Los Angeles County by a single arbitrator who shall be a
former California Superior Court judge. 
Except as may be otherwise provided herein, the arbitration shall be
conducted under the California Arbitration Act, Code of Civil Procedure 1280 et
seq.  The parties shall have the
discovery rights provided in Code of Civil Procedure 1283.05 and 1283.1.  The arbitration hearing shall be commenced
within ninety (90) days after the selection of an arbitrator by mutual
agreement or, absent such mutual agreement, the filing of the application with
JAMS by either party hereto, and a decision shall be rendered by the arbitrator
within thirty (30) days after the conclusion of the hearing. The arbitrator
shall have complete authority to render any and all relief, legal and
equitable, appropriate under California law, including the award of punitive
damages where legally available and warranted. The arbitrator shall award costs
of the proceeding, including reasonable attorneys’ fees and the arbitrator’s
fee and costs, to the party determined to have substantially prevailed.  Judgment on the award can be entered in a
court of competent jurisdiction.

 

                                                (ii)           The foregoing notwithstanding, if the
amount in controversy exceeds $200,000, exclusive of attorneys’ fees and costs,
the matter shall be litigated in the Los Angeles County Superior Court as a
regular non-jury civil action except that a former California Superior Court
Judge selected by the parties or by JAMS, as hereinabove provided, shall be
appointed as referee to try all issues of fact and law, without a jury,
pursuant to California Code of Civil Procedure §638 et seq.  The parties hereto expressly waive a trial by
jury. Judgment entered on the decision of the referee shall be appealable as a
judgment of the Superior Court.  The
prevailing party shall be entitled to receive its reasonable attorneys’ fees
and costs from the other party.

 

                                G.            Payments to Laverty are subject to
payroll deductions and withholdings if and to the extent required by law.  Salary payments will be reduced on a
dollar-for-dollar basis by payments received by Laverty for disability under
governmental or Company paid disability insurance programs.

 

                                H.            All provisions of this Agreement
which must survive the termination of this Agreement to give them their
intended effect shall so survive.

 

                                I.              If any provision of this Agreement
is determined to be unenforceable as illegal or contrary to public policy, it
shall be deemed automatically amended to the extent necessary to render it
enforceable provided the intent of the parties as expressed herein will not
thereby be frustrated.  Otherwise the
unenforceable provision shall be severed from the remaining provisions which
shall remain in effect.

 

                                J.             The Company will reimburse Laverty
for up to $2,500 for legal fees incurred in connection with the negotiation and
preparation of this Agreement.

 

6

 

                IN WITNESS WHEREOF, the parties have
executed this Agreement as of the date first above written.

 

	
   

  	
  FARMER BROS. CO.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ GUENTER W. BERGER

  
	
   

  	
   

  	
  Guenter W. Berger, Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /S/ ROGER M. LAVERTY III

  
	
   

  	
   

  	
  Roger M. Laverty III

  

 

 

7

 

EXHIBIT A

 

RELEASE AGREEMENT

 

 

I
understand that my position with Farmer Bros. Co. (the “Company”) terminated
effective            ,
20   (the “Separation Date”). 
The Company has agreed that if I choose to sign this Agreement, the
Company will pay me severance benefits (minus the standard withholdings and
deductions) pursuant to the terms of the Employment Agreement entered into as
of                ,
2006 between myself and the Company.  I
understand that I am not entitled to this severance payment unless I sign this
Agreement.  I understand that in addition
to this severance, the Company will pay me all of my accrued salary and
vacation, to which I am entitled by law regardless of whether I sign this
release.

 

In
consideration for the severance payment I am receiving under this Agreement, I acknowledge
and agree that I am bound by the provisions of Sections 10A and 10B of my
Employment Agreement and hereby release the Company and its current and former
officers, directors, agents, attorneys, employees, shareholders, and affiliates
from any and all claims, liabilities, demands, causes of action, attorneys’
fees, damages, or obligations of every kind and nature, whether they are known
or unknown, arising at any time prior to the date I sign this Agreement.  This general release includes, but is not
limited to: all federal and state statutory and common law claims, claims
related to my employment or the termination of my employment or related to
breach of contract, tort, wrongful termination, discrimination, wages or
benefits, or claims for any form of compensation.  This release is not intended to release any
claims I have or may have against any of the released parties for (a)
indemnification as a director, officer, agent or employee under applicable law,
charter document or agreement, (b) severance and other termination benefits
specifically provided for in my Employment Agreement which constitutes a part
of the consideration for this release, (c) health or other insurance benefits
based on claims already submitted or which are covered claims properly submitted
in the future, (d) vested rights under pension, retirement or other benefit
plans, or (e) in respect of events, acts or omissions occurring after the date
of this Release Agreement.  In releasing
claims unknown to me at present, I am waiving all rights and benefits under
Section 1542 of the California Civil Code, and any law or legal principle of
similar effect in any jurisdiction:  “A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.”

 

I
acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under the federal Age Discrimination in Employment Act of
1967, as amended (“ADEA”).  I also
acknowledge that the consideration given for the waiver in the above paragraph
is in addition to anything of value to which I was already entitled.  I have been advised by this writing, as
required by the ADEA that: (a) my waiver and release do not apply to any claims
that may arise after my signing of this Agreement; (b) I should consult with an
attorney prior to executing this release; (c) I have twenty-one (21) days
within which to consider this release (although I may choose to voluntarily
execute this release earlier); (d) I have seven (7) days following the
execution of this release to revoke the Agreement; and (e) 

 

8

 

this Agreement will not be effective until the
eighth day after this Agreement has been signed both by me and by the Company.

 

I
accept and agree to the terms and conditions stated above:

 

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Roger M. Laverty III

  

 

9

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