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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2008

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 0-1375

FARMER BROS. CO.

(exact name of registrant as specified in its charter)

Delaware		95-0725980
(State of Incorporation)		(I.R.S. Employer Identification No.)

20333 South Normandie Avenue Torrance, California		90502
(address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (310) 787-5200

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.

Large Accelerated Filer o Accelerated Filer x Non-Accelerated Filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO x

On February 1, 2009 the registrant had 16,075,080 shares outstanding of its common stock, par value $1.00 per share, which is the registrant’s only class of common stock.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

FARMER BROS. CO.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share and per share data)

	December 31, 2008			June 30, 2008
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	40,826		$	9,973
Short term investments	43,972			113,286
Accounts and notes receivable, net	24,564			19,856
Inventories	55,872			54,253
Income tax receivable	3,514			2,879
Deferred income taxes	12,452			7,485
Prepaid expenses	11,407			10,018
Total current assets	$	192,607		$	217,750

Property, plant and equipment, net	$	85,162		$	69,065
Goodwill and other intangible assets, net	16,346			17,568
Other assets	3,161			746
Deferred income taxes	7,855			7,855
Total assets	$	305,131		$	312,984

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,362		$	12,169
Accrued payroll expenses	9,316			8,449
Other	8,241			8,291
Total current liabilities	$	25,919		$	28,909
Accrued postretirement benefits	$	17,508		$	17,620
Other long term liabilities	2,311			—
Total liabilities	$	45,738		$	46,529
Commitments and contingencies	—			—
Stockholders’ equity:
Common stock, $1.00 par value, authorized 25,000,000 shares; 16,075,080 issued and outstanding	$	16,075		$	16,075
Additional paid-in capital	30,753			30,612
Retained earnings	247,951			257,693
Unearned ESOP shares	(35,990		)	(38,529		)
Less accumulated comprehensive income	604			604
Total stockholders’ equity	$	259,393		$	266,455
Total liabilities and stockholders’ equity	$	305,131		$	312,984

The accompanying notes are an integral part of these financial statements.

FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share data)
(Unaudited)

	Three months ended December 31,						Six months ended December 31,
	2008			2007			2008			2007
Net sales	$	76,530		$	71,359		$	143,053		$	132,302
Cost of goods sold	39,212			37,183			74,784			69,399
Gross profit	$	37,318		$	34,176		$	68,269		$	62,903
Selling expense	30,193			25,485			58,197			48,840
General and administrative expenses	6,912			7,902			14,114			15,802
Operating expenses	$	37,105		$	33,387		$	72,311		$	64,642
Income (loss) from operations	$	213		$	789		$	(4,042	)	$	(1,739	)
Other (expense) income
Dividend income	902			1,050			1,949			2,077
Interest income	461			965			938			2,224
Other, net (expense) income	(812		)	(5,168		)	(10,662		)	(8,062		)
Total other (expense) income	$	551		$	(3,153	)	$	(7,775	)	$	(3,761	)
Income (loss) before taxes	764			(2,364		)	(11,817		)	(5,500		)
Income tax expense (benefit)	870			(2,137		)	(5,627		)	(4,320		)
Net loss	$	(106	)	$	(227	)	$	(6,190	)	$	(1,180	)

Basic and fully diluted earnings per share	$	(0.01	)	$	(0.02	)	$	(0.43	)	$	(0.08	)

Weighted average shares outstanding	14,480,971			14,255,374			14,455,023			14,226,424

The accompanying notes are an integral part of these financial statements.

FARMER BROS. CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Six months ended December 31,
	2008			2007
Cash flows from operating activities:
Net loss	$	(6,190	)	$	(1,180	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	7,256			5,293
Deferred income taxes	(4,969		)	—
Gain (loss) on sales of assets	372			(98		)
ESOP and share based compensation expense	2,680			2,628
Net loss on investments	10,792			8,146
Change in operating assets and liabilities:
Short term investments	58,521			10,727
Accounts and notes receivable	(4,708		)	(3,060		)
Inventories	(1,618		)	(8,554		)
Income tax receivable	(634		)	(5,440		)
Goodwill and intangibles	—			(351		)
Prepaid expenses	(1,389		)	(3,319		)
Other assets	(2,416		)	—
Accounts payable	(3,808		)	1,025
Accrued payroll expenses and other liabilities	818			(1,107		)
Accrued postretirement benefits	(112		)	1,823
Other long-term liabilities	2,311			—
Total adjustments	$	63,096		$	7,713
Net cash provided by operating activities	$	56,906		$	6,533
Cash flows from investing activities:
Purchases of property, plant and equipment	(22,522		)	(6,166		)
Proceeds from sales of property, plant and equipment	20			133
Net cash used in investing activities	$	(22,502	)	$	(6,033	)
Cash flows from financing activities:
Dividends paid	(3,551		)	(3,216		)
Net cash used in financing activities	$	(3,551	)	$	(3,216	)
Net increase (decrease) in cash and cash equivalents	30,853			(2,716		)
Cash and cash equivalents at beginning of period	9,973			12,586
Cash and cash equivalents at end of period	$	40,826		$	9,870

The accompanying notes are an integral part of these financial statements.

Notes to Consolidated Financial Statements

Note 1. Unaudited Financial Statements

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete consolidated financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals, unless otherwise indicated) considered necessary for a fair presentation of the interim financial data have been included. Operating results for the three and six month periods ended December 31, 2008 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2009.

The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Farmer Bros. Co. annual report on Form 10-K for the fiscal year ended June 30, 2008.

Coffee Brewing Equipment and Service

The Company has reclassified its reporting for expenses related to coffee brewing equipment provided to customers. These costs include the cost of the equipment, depreciation on capitalized equipment as well as the cost of servicing that equipment (including service employees’ salaries and the cost of supplies and parts). Accordingly, such costs are reported as cost of sales in the accompanying financial statements for the fiscal quarters ended December 31, 2008 and 2007, in the amounts of $2.2 million and $5.1 million respectively, and for the six month periods ended December 31, 2008 and 2007, in the amounts of $4.5 million and $10.2 million, respectively. In prior periods, these costs were presented as selling expenses. This change impacts reported gross profit in the periods presented by these amounts. The change reduces gross profit but has no impact on net income, total assets, or cash flows in period.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates.

Net Loss per Share

Net loss per share has been computed in accordance with Statement of Financial Accounting Standards No. 128, “Earnings per Share” excluding unallocated shares held by the Company’s Employee Stock Ownership Plan. Net loss per share is computed by dividing income available to common stockholders by the number of weighted average shares outstanding. For purposes of computing earnings per share, all potentially dilutive instruments are anti-dilutive because of the net loss presented for all periods.

New Accounting Pronouncements

In March 2008, the Financial Accounting Standards Board “FASB” issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” “SFAS 161” which amends and expands Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS 161 requires tabular disclosure of the fair value of derivative instruments and their gains and losses. This Statement also requires disclosure regarding the credit—risk related contingent features in derivative agreements, counterparty credit risk, and strategies and objectives for using derivative instruments. The Company is required to adopt SFAS 161 in the third quarter of fiscal 2009. The Company does not currently believe that adopting SFAS 161 will have a material impact on its consolidated financial statements.

Effective July 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 159, “The Fair Value for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 allows companies the option to irrevocably elect, on a contract by contract basis, fair value as the initial and subsequent measurement for certain financial assets and financial liabilities. The Company has not elected

the option for fair value measurement under SFAS 159 for any additional financial assets or financial liabilities that were not previously recognized at fair market value.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R significantly changes the accounting for business combinations in a number of areas, including the treatment of contingent consideration, pre-acquisition contingencies, transaction costs, in-process research and development and restructuring costs. In addition, under SFAS 141R, changes in an acquired entity’s deferred tax assets and uncertain tax positions after the measurement period will impact income tax expense. SFAS 141R is effective for fiscal years beginning after December 15, 2008. The Company will adopt SFAS 141R beginning in the first quarter of fiscal 2010. SFAS 141R will change the Company’s accounting treatment for business combinations on a prospective basis.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 changes the accounting and reporting for minority interests, which will be re-characterized as non-controlling interests and classified as a component of equity. This new consolidation method significantly changes the accounting for transactions with minority interest holders. SFAS 160 is effective for fiscal years beginning after December 15, 2008. The Company will adopt SFAS 160 beginning in the first quarter of fiscal 2010. The Company does not currently believe that adopting SFAS 160 will have a material impact on its consolidated financial statements.

In April 2008, the FASB issued FASB Staff Position (“FSP”) SFAS No. 142-3 “Determination of the Useful Life of Intangible Assets” (“FSP SFAS 142-3”). FSP SFAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognizable intangible asset under Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). FSP SFAS 142-3 is intended to improve the consistency between the useful life of a recognizable intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS142. FSP SFAS 142-3 is effective for fiscal years beginning after December 15, 2008. The Company will adopt FSP SFAS 142-3 beginning in the first quarter of fiscal 2010. FSP SFAS 142-3 will change the Company’s determination of useful lives for intangible assets on a prospective basis.

Note 2. Investments and Derivative Instruments

The Company purchases various derivative instruments as investments or to create economic hedges of its interest rate risk and commodity price risk. At December 31, 2008 and June 30, 2008, derivative instruments are not designated as accounting hedges as defined by Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The fair value of derivative instruments is based upon broker quotes. The Company records unrealized gains and losses on trading securities and changes in the market value of certain coffee contracts meeting the definition of derivatives in Other, net (expense) income.

The Company adopted Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”) on July 1, 2008. SFAS 157 defines fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Under SFAS 157, the Company groups its assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

· Level 1 — Valuation is based upon quoted prices for identical instruments traded in active markets.

· Level 2 — Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

· Level 3 — Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

The Company’s preferred stock has been grouped as follows at December 31, 2008 (in thousands, unaudited):

	Total		Level 1		Level 2		Level 3
Preferred stock	$	42,976	$	10,419	$	32,557	$	—

Investments, consisting of marketable debt and equity securities and money market instruments, are held for trading purposes and are stated at fair value.

Investments are as follows (in thousands):

	December 31, 2008		June 30, 2008
	(Unaudited)
Trading securities at fair value
U.S. Treasury Obligations	$	—	$	54,517
Preferred Stock	42,976		58,204
Futures, options and other derivatives	996		565
	$	43,972	$	113,286

Gains and losses, both realized and unrealized, are included in Other, net (expense) income. Net realized and unrealized gains and losses are as follows (unaudited):

	December 31, 2008			December 31, 2007

Net realized gains (losses)	$	238		$	(2,537	)
Net unrealized losses	(11,030		)	(5,525		)
	$	(10,792	)	$	(8,062	)

Note 3. Inventories

December 30, 2008	Processed		Unprocessed		Total
(Unaudited)	(In thousands)
Coffee	$	10,808	$	18,119	$	28,927
Allied products	13,845		4,856		18,701
Coffee brewing equipment	1,883		6,361		8,244
	$	26,536	$	29,336	$	55,872

June 30, 2008	Processed		Unprocessed		Total
	(In thousands)
Coffee	$	9,929	$	16,933	$	26,862
Allied products	14,440		4,601		19,041
Coffee brewing equipment	1,883		6,467		8,350
	$	26,252	$	28,001	$	54,253

Inventories are valued at the lower of cost or market. Costs of coffee and allied products are determined on the last in, first out (LIFO) basis. Costs of coffee brewing equipment manufactured are accounted for on the first in, first out (FIFO) basis. An actual valuation of inventory under the LIFO method is made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must necessarily be based on management’s estimates of expected year-end inventory levels and costs. Because these estimates are subject to many forces beyond management’s control, interim results are subject to the final year-end LIFO inventory valuation.

Note 4. Employee Benefit Plans

The Company provides pension plans for most full time employees. Generally the plans provide benefits based on years of service and/or a combination of years of service and earnings. Retirees are also eligible for medical and life insurance benefits.

Company Pension Plans

The Company has a defined benefit plan for all employees not covered under a collective bargaining agreement (Farmer Bros. Co. Plan) and defined benefit pension plan (Brewmatic Co. Plan) for certain hourly employees covered under a collective bargaining agreement. The net periodic benefit costs for the defined benefit plans are as follows (unaudited):

Components of net periodic benefit cost

	Three months ended December 31,						Six months ended December 31,
	2008			2007			2008			2007
	(In thousands)						(In thousands)
Service cost	$	615		$	589		$	1,230		$	1,178
Interest cost	1,477			1,278			2,954			2,556
Expected return on plan assets	(1,769		)	(2,017		)	(3,538		)	(4,034		)
Amortization of net (gain)/loss*	145			2			290			4
Amortization of transition (asset)/obligation*	—			—			—			—
Amortization of prior service cost/(credit)*	50			15			101			30
Net periodic benefit (credit) cost	$	518		$	(133	)	$	1,037		$	(266	)

* These amounts represent the estimated portion of the net (gain)/loss, transition (asset)/obligation, and net prior service cost/(credit) remaining in accumulated other comprehensive income that is expected to be recognized as a component of net periodic benefit cost over the current fiscal year.

Weighted-average assumptions used to determine net periodic benefit cost

	FY 2009		FY 2008
Discount rate	6.80	%	6.00	%
Expected long-term rate of return	8.25	%	8.25	%
Rate of compensation increase	3.00	%	3.00	%

Basis used to determine expected long-term return on plan assets

Historical and future expected rates of return of multiple asset classes were analyzed to develop a risk-free real rate of return and risk premiums for each asset class. The overall rate for each asset class was developed by combining a long-term inflation component, the risk-free real rate of return, and the associated risk premium. A weighted average rate of return was developed based on those overall rates of return and the target asset allocations of the plans.

Note 5. Stock-Based Compensation

On August 23, 2007, the Company’s Board of Directors approved the Farmer Bros. Co. 2007 Omnibus Plan (the “Plan”), which was approved by stockholders on December 6, 2007. Prior to adoption of the Plan the Company had no stock-based compensation plan. Initial awards under the Plan were made in the third quarter of fiscal 2008, and additional awards under the Plan were made in the second quarter of fiscal 2009. Awards issued under the Plan may

take the form of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, performance-based awards, stock payments, cash-based awards or other incentives payable in cash or shares of stock, or any combination thereof. Each award will be set forth in a separate agreement with the person receiving the award and will indicate the type, terms and conditions of the award. The maximum number of shares of common stock as to which awards may be granted under the Plan is 1,000,000, subject to adjustment as provided in the Plan.

The Company accounts for stock-based compensation in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), and related SEC rules included in Staff Accounting Bulletin No. 107 which require the measurement and recognition of compensation expense for all stock-based payment awards made under the Plan based on estimated fair values.

Stock Options

SFAS 123R requires companies to estimate the fair value of stock-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Consolidated Statement of Operations. Prior to fiscal 2008 the Company did not have stock-based compensation.

Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest during the period. Compensation expense recognized for all stock option awards granted is recognized using the straight-line method over the vesting period of three years. The stock-based compensation expense recognized in the Company’s consolidated statement of operations for the three and six month periods ended December 31, 2008 is based on awards ultimately expected to vest. Currently, management estimates that there will be no forfeitures based on the Company’s historical turnover. SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company uses the Black-Scholes option valuation model, which requires management to make certain assumptions for estimating the fair value of stock options at the date of the grant. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimates, in management’s opinion the existing models may not necessarily provide a reliable single measure of the fair value of the Company’s stock options. Although the fair value of stock options is determined in accordance with SFAS 123R using an option valuation model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.

The following are the weighted average assumptions used in the Black-Scholes valuation model for the six months ended December 31, 2008:

	FY 2009
Average fair value of options	$	6.68
Risk-free interest rate	5.45		%
Dividend yield	2.2		%
Expected life	5 years
Expected stock price volatility	32.4		%

The following table summarizes stock option activity from adoption of the Plan through December 31, 2008:

	Number of Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Life		Aggregate Intrinsic Value
	(in thousands)			(Years)		(in thousands)
Outstanding at July 1, 2008	118	$	22.62	$	6.60	$	—
Activity:
Granted	114	21.76		6.46		—
Forfeited	—	—		—		—
Exercised	—	—		—		—
Expired	—	—		—		—
Outstanding at December 31, 2008	232	$	21.98	$	6.53	$	629
Exercisable at December 31, 2008	—	$	—	$	—	$	—

On December 11, 2008, the Company granted 114,000 options with an exercise price of $21.76 per share to eligible employees, officers and directors under the Plan. The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on the Company’s closing stock price of $24.94 at December 31, 2008, the last trading day of the quarter, which would have been received by award holders had all award holders exercised their awards that were in-the-money as of that date. As of December 31, 2008, there was approximately $1,260,000 of unrecognized compensation cost related to stock options. Compensation expense recognized in general and administrative expense for the three and six month periods ended December 31, 2008 was $60,000 and $139,000, respectively.

Restricted Stock

On December 11, 2008, the Company granted 26,000 shares of restricted stock, with a weighted average grant date fair value of $21.76 per share to eligible employees, officers and directors under the Plan. Shares of restricted stock vest at the end of three years from the grant date. Compensation expense is recognized on a straight-line basis over the service period based on the estimated fair value of the restricted stock. Compensation expense recognized in general and administrative expense for the three and six month periods ended December 31, 2008 was $48,000 and $108,000, respectively. As of December 31, 2008, there was approximately $952,000 of unrecognized compensation cost related to restricted stock.

The following table summarizes the status of the Company’s restricted stock as of December 31, 2008:

	Restricted Stock Grants	Weighted Average Grant Date Fair Value
	(in thousands)
Outstanding at July 1, 2008	25	$	22.67
Activity:
Granted	26	21.76
Forfeited	—	—
Exercised	—	—
Expired	—	—
Outstanding at December 31, 2008	51	$	22.22
Exercisable at December 31, 2008	—	$	—

Note 6. Income Taxes

In September 2008, the Internal Revenue Service (“IRS”) completed an examination of the Company’s U.S. income tax returns for the fiscal years ended June 30, 2004, 2005 and 2006. The Company and the IRS reached a settlement on certain issues which resulted in a decrease to the Company’s total unrecognized tax benefits of $421,000 (excluding interest and penalties). Of this amount, $266,000 has been realized as income in the current fiscal year.

California notified the Company in January 2008 of their intent to conduct a state examination upon the finalization of the IRS examination. The California examination has not commenced as of December 31, 2008. The Company believes it is reasonably possible that a portion of its total unrecognized tax benefits will decrease in the next 12 months upon the conclusion of this, and other ongoing state examinations. However, it is premature to assess the range of the reasonably possible changes to the Company’s unrecognized tax benefits.

As of June 30, 2008 and December 31, 2008, the Company had not recognized the following tax benefits in its consolidated financial statements:

(in thousands, unaudited)	December 31, 2008		June 30, 2008
Total unrecognized tax benefits*	$	387	$	808
Unrecognized tax benefits that would affect the Company’s effective tax rate, if recognized*	$	255	$	668

* Not including interest and penalties

The Company’s effective tax rate of 45.9% primarily consists of its statutory federal and state combined rate of 38.9% (benefit) plus a 5.9% (benefit) related to the Company’s dividends received deduction. The federal and state rates represent a benefit in the current year because the Company is in a loss position.

During the quarter ended December 31, 2008, the Company established a valuation allowance of $427,000 against a portion of its deferred tax assets related to capital loss carry forwards. The Company has capital loss carry forwards that will expire in the future if they are not used. These losses may only be offset against realized capital gains. Due to the recent unrealized losses incurred in the Company’s investment portfolio and general downturn in market conditions, the Company has concluded that a valuation allowance is required under Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” as it is not “‘more likely than not” that sufficient capital gains will be realized before the expiration of the capital losses.

Note 6. Pending Acquisition

Pursuant an Asset Purchase Agreement (the “Purchase Agreement”) with Sara Lee Corporation and its affiliate (collectively, the “Seller”), the Company will purchase certain assets used in connection with the Seller’s DSD Coffee Business, which generally consists of manufacturing and selling coffee, tea and related products through a network of facilities and vehicles. This business also includes the distribution, sale and service of brewed and liquid coffee equipment. The assets to be purchased include manufacturing plants in Houston, Texas and Oklahoma City Oklahoma, approximately 61 leased warehouses and one owned warehouse, approximately 445 vehicles, and all DSD Coffee Business inventory, trademarks and trade names; the most well known being SUPERIOR®, MCGARVEY®, CAIN’S®, IRELAND®, JUSTIN LLOYD®, METROPOLITAN® and PREBICA®. The Company anticipates hiring approximately 800 employees associated with Seller’s DSD business. At closing, the Company will assume certain liabilities, including obligations under contracts, environmental liabilities with respect to the transferred facilities, pension liabilities, advertising and trade promotion accruals, and accrued vacation as of the closing for hired personnel.

The purchase price is $45.4 million, subject to certain adjustments, including the amount of inventory and prepaid expenses at closing, as well as additional amounts associated with (i) certain accounting costs and costs to provide the Company with information technology to operate the purchased assets, which costs will be shared by the parties; and (ii) reimbursement by the Company of certain accrued vacation associated with the hired personnel. The transaction is expected to close by February 28, 2009. In connection with the closing, the Seller and the Company will enter into certain operational agreements, including trademark and formula license agreements, co-pack agreements, a liquid coffee distribution agreement, a transition services agreement, and a green coffee and tea purchase agreement. The transaction is subject to customary closing conditions, as well as completion of the information technology carve-out and delivery of historical financial statements of the DSD Business. The Purchase Agreement also includes customary indemnification obligations of the parties.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements contained in this quarterly report on Form 10-Q regarding the risks, circumstances and financial trends that may affect our future operating results, financial position and cash flows are not based on historical fact and are forward-looking statements within the meaning of federal securities laws and regulations. These statements are based on management’s current expectations, assumptions, estimates and observations of future events and include any statements that do not directly relate to any historical or current fact. These forward-looking statements can be identified by the use of words like “anticipates,” “feels,” “estimates,” “projects,” “expects,” “plans,” “believes,” “intends,” “will,” “assumes” and other words of similar meaning. Owing to the uncertainties inherent in forward-looking statements, actual results could differ materially from those set forth in forward-looking statements. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Users should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. The Company undertakes no obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the federal securities laws. Factors that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to, fluctuations in availability and cost of green coffee, competition, organizational changes, the impact of a weaker economy, business conditions in the coffee industry and food industry in general, the Company’s continued success in attracting new customers, variances from budgeted sales mix and growth rates, and weather and special or unusual events, as well as other risks described in this report and other factors described from time to time in the Company’s filings with the SEC.

Pending Acquisition

As described in the Company’s current report on Form 8-K filed with the SEC on December 8, 2008, Farmer Bros. Co. has entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Sara Lee Corporation and its affiliate (collectively, the “Seller”).

Pursuant to the Purchase Agreement, the Company will purchase certain assets used in connection with the Seller’s DSD Coffee Business, which generally consists of manufacturing and selling coffee, tea and related products through a network of facilities and vehicles. This business also includes the distribution, sale and service of brewed and liquid coffee equipment.

The assets to be purchased include manufacturing plants in Houston, Texas and Oklahoma City Oklahoma, approximately 61 leased warehouses and one owned warehouse, approximately 445 vehicles, and all DSD Coffee Business inventory, trademarks and trade names; the most well known being SUPERIOR®, MCGARVEY®, CAIN’S®, IRELAND®, JUSTIN LLOYD®, METROPOLITAN® and PREBICA®. The Company anticipates hiring approximately 800 employees associated with Seller’s DSD business.

At closing, the Company will assume certain liabilities, including obligations under contracts, environmental liabilities with respect to the transferred facilities, pension liabilities, advertising and trade promotion accruals, and accrued vacation as of the closing for hired personnel.

In connection with the closing, the Seller and the Company will enter into certain operational agreements, including trademark and formula license agreements, co-pack agreements, a liquid coffee distribution agreement, a transition services agreement, and a green coffee and tea purchase agreement.

The transaction is subject to customary closing conditions, as well as completion of the information technology carve-out and delivery of historical financial statements of the DSD Business. The Purchase Agreement also includes customary indemnification obligations of the parties.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, a copy of which is filed as an exhibit to this Company’s quarterly report on Form 10-Q.

Liquidity and Capital Resources

The Company expects to fund the purchase price for the assets described above with cash and debt. The Company expects to make an additional investment (above the purchase price) of approximately $15 million to finance working capital in fiscal 2009, and not more than $20 million to finance integration expenses, transaction costs and capital expenditures from operations, cash and debt in future years.

The continued weakness in the economy during fiscal 2009 and the sustained decline in the U.S. housing market kept pressure on the financial markets and have reduced the value and liquidity of the preferred stock we hold. As a result, we are negotiating with a commercial bank for a line of credit to provide sufficient liquidity to enable the Company to achieve its goals and provide time for the financial markets to recover. In the event we have not secured acceptable financing with a bank or other commercial lender prior to closing the acquisition, a portion of the purchase price may include a $20 million secured promissory note in favor of the Seller.

During the fiscal quarter ended December 31, 2008 we incurred approximately $4 million to substantially complete CBI’s new plant. Planned spending in fiscal 2009 includes $10 million investment in our Torrance plant, most of which will occur in the second half of fiscal 2009, to provide more roasting and packaging flexibility and to further reduce material handling. We have over 60% of our branches operating on the new mobile sales software and hardware installation and the remaining branch sales locations are expected to be installed by the end of the fourth quarter of fiscal 2009 at an estimated cost of approximately $1.6 million.

Our working capital is composed of the following (unaudited, in thousands):

	December 31, 2008		December 31, 2007

Current assets	$	192,607	$	231,031
Current liabilities	25,919		27,019
Working capital	$	166,688	$	204,012

Capital expenditures	$	22,522	$	6,166
Dividends paid	$	3,551	$	3,216

At December 31, 2008 we had no material commitments for capital expenditures other than those described above.

Results of Operations

The Company’s net sales in the second quarter of fiscal 2009 increased 7%, or $5,170,000, to $76,530,000 as compared to $71,359,000 in the second quarter of fiscal 2008; units sold increased 4% in this period as compared to the same period in the prior year. Net sales for the first half of fiscal 2009 increased 8%, or $10,751,000, to $143,053,000 from $132,302,000 in the same period of fiscal 2008, primarily due to higher selling prices, reflecting increased product costs, offset by a 2% decrease in units sold. We expect weakness in the general economy and reduced consumer spending will have a continued impact on our sales through the remainder of fiscal 2009.

Cost of goods sold in the second quarter of fiscal 2009 increased 5% to $39,212,000 or 51% of sales as compared to $37,183,000, or 52% of sales, in the second quarter of fiscal 2008. Gross profit in the second quarter of fiscal 2009 increased $3,142,000 to $37,318,000, or 49% of sales, as compared to $34,176,000, or 48% of sales, in the second quarter of fiscal 2008. Cost of goods sold for the first six months of fiscal 2009 increased $5,386,000 to $74,785,000 as compared to $69,399,000 in the same period of fiscal 2008. Gross profit in the first half of 2009 increased $5,366,000 to $68,269,000, or 48% of sales, as compared to $62,903,000, or 48% of sales, in the same

period of fiscal 2008. Higher commodity prices and higher fuel costs have kept pressure on our profit margins in the first half of fiscal 2009 as compared to the same period of fiscal 2008. While we make every effort to pass these higher costs through to our customers, competition restricts our ability to do so. We cannot predict whether the current profit margins can be maintained.

Operating expenses in the second quarter of fiscal 2009 increased $3,719,000 to $37,105,000 from $33,386,000 in the second quarter of fiscal 2008, largely because of increased selling expenses. Selling expenses for the three months ended December 31, 2008 increased $4,708,000, or 39% of sales, to $30,193,000 from 36% of sales or $25,485,000 in the same period of fiscal 2008. Selling expenses for the first half of fiscal 2009 increased to $58,197,000, or 41% of sales, from $48,840,000, or 37% of sales, in the same period of fiscal 2008. This increase is primarily the result of higher sales and a $1.8 million (19%) increase in freight costs in the first two quarters of fiscal 2009.

Our income from operations in the second quarter of fiscal 2009 was $213,000 as compared to income from operations of $790,000 in the same quarter of fiscal 2008. Loss from operations in the first half of fiscal 2009 was ($4,042,000) as compared to ($1,739,000) in the same period of fiscal 2008.

Total other income (expense) in the second quarter of fiscal 2009 was $551,000 as compared to an expense of ($3,153,000) in the second quarter of fiscal 2008. Total other (expense) in the first half of fiscal 2009 was ($7,775,000) as compared to ($3,761,000) in the first half of fiscal 2008. These changes are primarily the result of changes in Other, net (expense) income, which reflects realized and unrealized losses (gains) in our preferred stock portfolio. Financial market conditions described in our Form 10-K for the year ended June 30, 2008 have continued into the first half of fiscal 2009. The downturn in the housing market combined with real estate financing and liquidity issues have put pressure on the valuations of the preferred stocks we hold. The Company has no direct exposure to sub-prime mortgages, but financial companies compose approximately 85% of the universe of preferred stocks. Selling pressure from leveraged investors who need liquidity and a new supply of preferred issues taking advantage of lower dividend rates have resulted in a downward pressure on values.

Investor demand for the safety of U.S. Treasury instruments has flattened the U.S. Treasury yield curve and widened spreads between preferred stocks and U.S. Treasury instruments. We believe that preferred stocks are currently priced cheaper to U.S. Treasury bond yields than they have ever traded. Although aggressive easing of interest rates by the world’s central banks and other economic stimulus actions by governments may eventually have positive effects on this situation, we expect little improvement until the housing market stabilizes.

As a result of the forgoing factors, net loss for the second quarter of fiscal 2009 was ($106,000), or ($0.01) per share, as compared to a net loss of ($228,000), or ($0.02) per share, in the second quarter of fiscal 2008. Net loss for the first two quarters of fiscal 2009 was ($6,190,000), or ($0.42) per share as compared to ($1,180,000), or ($0.08) per share, in the same period of fiscal 2008.

Quarterly Financial Data (Unaudited)

	March 31, 2008			June 30, 2008			September 30, 2008			December 31, 2008
	(In thousands, except share data)
Net sales	$	67,276		$	66,907		$	66,524		$	76,530
Gross profit	$	30,657		$	25,851		$	30,951		$	37,318
(Loss) income from operations	$	(1,004	)	$	(7,901	)	$	(4,255	)	$	213
Net loss	$	(2,710	)	$	(4,034	)	$	(6,085	)	$	(106	)
Net (loss) income per common share	$	(0.19	)	$	(0.27	)	$	(0.42	)	$	0.01

	March 31, 2007			June 30, 2007			September 30, 2007			December 31, 2007
	(In thousands, except share data)
Net sales	$	54,382		$	58,137		$	60,943		$	71,359
Gross profit	$	26,993		$	29,452		$	28,727		$	34,177
(Loss) income from operations	$	(2,247	)	$	(232	)	$	(2,528	)	$	789
Net income (loss)	$	1,512		$	1,337		$	(953	)	$	(227	)
Net income (loss) per common share	$	0.11		$	0.09		$	(0.07	)	$	(0.02	)

Item 3. Qualitative and Quantitative Disclosures About Market Risk

Interest Rate Risk

We are exposed to market value risk arising from changes in interest rates on our securities portfolio. Our portfolio of investment grade money market instruments can include at any given time: discount commercial paper, medium term notes, federal agency issues and treasury securities. As of December 31, 2008, over 90% of these funds were invested in a money market fund which invests in investment grade commercial paper and U.S. Treasury securities. The funds are available on demand, and are currently covered under the U.S. Treasury Department Guarantee Program for Money Market Funds. As a result the funds have been classified as cash equivalents.

From time to time, our portfolio of preferred securities includes investments in derivatives that provide a natural economic hedge of interest rate risk. We review the interest rate sensitivity of these securities and (a) enter into “short positions” in futures contracts on U.S. Treasury securities or (b) hold put options on such futures contracts in order to reduce the impact of certain interest rate changes on such preferred stocks. Specifically, we attempt to manage the risk arising from changes in the general level of interest rates. We do not transact in futures contracts or put options for speculative purposes.

The following table demonstrates the impact of varying interest rate changes based on the preferred stock holdings, futures and options positions, and market yield and price relationships at December 31, 2008. This table is predicated on an instantaneous change in the general level of interest rates and assumes predictable relationships between the prices of preferred securities holdings, the yields on U.S. Treasury securities and related futures and options.

The number and type of futures and options contracts entered into depends on, among other items, the specific maturity and issuer redemption provisions for each preferred stock held, the slope of the U.S. Treasury yield curve, the expected volatility of U.S. Treasury yields, and the costs of using futures and/or options.

As of December 31, 2008 there were no futures or options contracts in place as an interest rate hedge.

	Market Value at December 31, 2008						Changes in Market
Interest Rate Changes	Preferred Securities		Futures and Options		Total Portfolio		Value of Total Portfolio
	(In thousands)
-150 basis points	$	43,542	$	—	$	43,542	$	566
-100 basis points	$	43,419	$	—	$	43,419	$	443
Unchanged	$	42,976	$	—	$	42,976	$	—
+100 basis points	$	42,046	$	—	$	42,046	$	(930	)
+150 basis points	$	41,134	$	—	$	41,134	$	(1,842	)

Commodity Price Risk

We are exposed to commodity price risk arising from changes in the market price of green coffee. We price our coffee inventory on the LIFO basis. In the normal course of business we hold a large green coffee inventory and enter into forward commodity purchase agreements with suppliers. We are subject to price risk resulting from the volatility of green coffee prices. Volatile price increases cannot, because of competition and market conditions, always be passed on to our customers. From time to time the Company will hold a mix of futures contracts and options to help hedge against volatile green coffee price changes. Gains and losses on these derivative instruments are realized immediately in Other, net (expense) income. At December 31, 2008 the potential change in fair value of commodity derivatives assuming a 10% change in the price of green coffee was approximately $400,000.

Item 4. Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and

procedures designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

As of December 31, 2008, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures pursuant to Rule 13(a)-15(e) promulgated under the Exchange Act. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2008, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

Management has determined that there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) during our fiscal quarter ended December 31, 2008, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - - OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

On December 11, 2008 the Company held its Annual Meeting. Of the 16,100,280 shares of common stock outstanding and entitled to vote at the Annual Meeting, 15,012,581 were represented at the meeting, or a 93% quorum.

At the Annual Meeting, stockholders:

1. Elected each of the following two (2) individuals to the Board of Directors to serve a three-year term as Class II directors until the Annual Meeting of Stockholders in 2011 and until their successors have been duly elected and qualified:

Director Nominee	Votes Cast For	Votes Withheld
Guenter W. Berger	14,778,798	233,783
Thomas A. Maloof	14,793,861	218,720

The other directors whose term of office as a director continued after the meeting are: Roger M. Laverty III; Martin A. Lynch; James J. McGarry; John H. Merrell; and Carol Farmer Waite.

2. Ratified the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2009. There were 14,861,387 votes for the appointment, 118,438 votes against the appointment, 32,756 abstentions and no broker non-votes.

Item 6. Exhibits

See Exhibit Index.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name	Title	Date


/s/ ROGER M. LAVERTY III	President and Chief Executive Officer	February 5, 2008
Roger M. Laverty III	(principal executive officer)	February 5, 2008


/s/ JOHN E. SIMMONS	Treasurer and Chief Financial Officer
John E. Simmons	(principal financial and accounting	February 5, 2008
	officer)

EXHIBIT INDEX

3.1		Certificate of Incorporation (filed as Exhibit 99 to the Company’s Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference).

3.2		Amended and Restated Bylaws (filed as Exhibit 3.2 to the Company’s Form 8-K filed with the SEC on June 8, 2006 and incorporated herein by reference).

4.1		Certificate of Designations of Series A Junior Participating Preferred Stock (filed as Exhibit 3.1 to the Company’s Form 8-K filed with the SEC on March 18, 2005 and incorporated herein by reference).

4.2		Rights Agreement dated March 17, 2005 by and between Farmer Bros. Co. and Wells Fargo Bank, N.A., as Rights Agent (filed as Exhibit 4.1 to the Company’s Form 8-K filed with the SEC on March 18, 2005 and incorporated herein by reference).

4.3		Specimen Stock Certificate (filed as Exhibit 4.1 to the Company’s Form 8-A/A filed with the SEC on February 6, 2009 and incorporated herein by reference).

10.1		Asset Purchase Agreement, dated as of December 2, 2008, by and among Sara Lee Corporation, Saramar, LLC and Farmer Bros. Co.(filed herewith).

10.2		Stock Purchase Agreement, dated April 27, 2007, by and among Farmer Bros. Co., Coffee Bean Holding Co., Inc., and the Stockholders of Coffee Bean Holding Co., Inc. (filed as Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on May 1, 2007 and incorporated herein by reference).

10.3		Farmer Bros. Co. Amended and Restated Pension Plan for Salaried Employees (filed as Exhibit 10.1 to the Company’s Form 10-K for the year ended June 30, 2007 and incorporated herein by reference).*

10.4		Farmer Bros. Co. Amended and Restated 2005 Incentive Compensation Plan (filed herewith).*

10.5		Farmer Bros. Co. Amended and Restated Employee Stock Ownership Plan (filed as Exhibit 10.5 to the Company’s Form 10-K for the year ended June 30, 2007 and incorporated herein by reference).*

10.6		Loan Agreement dated July 21, 2003 between the Company and Wells Fargo Bank, Trustee of the Farmer Bros. Co. Employee Stock Ownership Plan (filed herewith).

10.7		Form of Change in Control Severance Agreements entered into with each of the following officers: Michael J. King and John E. Simmons (filed as Exhibit 99 to the Company’s Form 10-Q for the quarter ended March 31, 2005 and incorporated herein by reference).*

10.8		Change in Control Severance Agreement (Laverty), dated as of June 2, 2006, by and between Farmer Bros. Co. and Roger M. Laverty III (filed as Exhibit 10.4 to the Company’s Form 8-K filed with the SEC on June 8, 2006 and incorporated herein by reference).*

10.9		Change in Control Severance Agreement (Webb), dated as of March 3, 2008, by and between Farmer Bros. Co. and Drew H. Webb (filed as Exhibit 10.4 to the Company’s Form 8-K filed with the SEC on June 8, 2006 and incorporated herein by reference).*

10.10		Form of Amendment No. 1 to Change in Control Severance Agreement entered into with each of the following officers: Roger M. Laverty III, Drew H. Webb, John E. Simmons and Michael J. King (filed herewith).*

10.11		Employment Agreement, dated as of June 2, 2006, by and between Farmer Bros. Co. and Roger M. Laverty III (filed as Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on June 8, 2006 and incorporated herein by reference).*

10.12		Amendment No. 1 to Employment Agreement, dated December 5, 2007, between Farmer Bros. Co. and Roger M. Laverty III (filed as Exhibit 10.1 to the Company’s Form 8-K/A filed with the SEC on December 11, 2007 and incorporated herein by reference)*

10.13		Amendment No. 2 to Employment Agreement, dated December 31, 2007, between Farmer Bros. Co. and Roger M. Laverty III (filed herewith).*

10.14		Employment Agreement, dated March 3, 2008, by and between Farmer Bros. Co. and Drew H. Webb (filed as Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on March 7, 2008 and incorporated herein by reference).*

10.15		Amendment No. 1 to Employment Agreement, dated December 31, 2007, between Farmer Bros. Co. and Drew H. Webb (filed herewith).*

10.16		2007 Omnibus Plan (filed as Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on August 29, 2007 and incorporated herein by reference) *

10.17		Form of 2007 Omnibus Plan Stock Option Grant Notice and Stock Option Agreement (filed as Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on February 26, 2008 and incorporated herein by reference).*

10.18		Form of 2007 Omnibus Plan Restricted Stock Award Grant Notice and Restricted Stock Award Agreement (filed as Exhibit 10.2 to the Company’s Form 8-K filed with the SEC on February 26, 2008 and incorporated herein by reference).*

10.19		Stock Ownership Guidelines for Directors and Executive Officers (filed as Exhibit 10.3 to the Company’s Form 8-K filed with the SEC on February 26, 2008 and incorporated herein by reference).*

10.20		Form of Indemnification Agreement for Directors and Officers of the Company, as adopted on May 18, 2006 (filed as Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on December 11, 2007 and incorporated herein by reference).*

10.21		Form of Award Letter (Fiscal 2006) under Farmer Bros. Co. 2005 Incentive Compensation Plan (filed as Exhibit 99.1 to the Company’s Form 8-K filed with the SEC on August 30, 2006 and incorporated herein by reference).*

10.22		Form of 2007 Target Award Notification Letter under Farmer Bros. Co. 2005 Incentive Compensation Plan (filed as Exhibit 99.1 to the Company’s Form 8-K filed with the SEC on December 22, 2006 and incorporated herein by reference).*

10.23		Form of Award Letter (Fiscal 2007) under Farmer Bros. Co. 2005 Incentive Compensation Plan (filed as Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on August 29, 2007 and incorporated herein by reference).*

10.24		Form of 2008 Target Award Notification Letter under Farmer Bros. Co. 2005 Incentive Compensation Plan (filed as Exhibit 10.2 to the Company’s Form 8-K filed with the SEC on December 11, 2007 and incorporated herein by reference).*

10.25		Form of Award Letter (Fiscal 2008) under Farmer Bros. Co. 2005 Incentive Compensation Plan (filed as Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on October 3, 2008 and incorporated herein by reference).*

10.30		Amendment 2008-1 to the Farmer Bros. Co. Amended and Restated Employee Stock Ownership Plan (filed herewith).

10.31		Good Faith Amendment to the Farmer Bros. Co. Amended and Restated Employee Stock Ownership Plan to comply with Code Section 401(a)(31)(B) as amended by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) (filed herewith).

31.1		Principal Executive Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)

31.2		Principal Financial Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)

32.1		Principal Executive Officer Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (furnished herewith)

32.2		Principal Financial Officer Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (furnished herewith)

* Management contract or compensatory plan or arrangement.

Exhibit 10.1

EXECUTION VERSION

ASSET PURCHASE AGREEMENT

BY AND AMONG

SARA LEE CORPORATION,

SARAMAR, LLC

AND

FARMER BROS. CO.

DECEMBER 2, 2008

TABLE OF CONTENTS

		Page

ARTICLE I. PURCHASED ASSETS; ASSUMED LIABILITIES		1

1.1.	Purchased Assets	1
1.2.	Limitations on Assignability	5
1.3.	Excluded Assets	5
1.4.	Assumption of Liabilities	8
1.5.	Excluded Liabilities	9
1.6.	DISCLAIMER OF WARRANTIES	9

ARTICLE II. PURCHASE PRICE		10

2.1.	Purchase Price	10
2.2.	Allocation	11
2.3.	Prorations	11
2.4.	Income Taxes	12
2.5.	Closing Costs, Transfer Taxes and Fees	12
2.6.	Post-Closing Consumable Inventory and Prepaid Expense Adjustment	13
2.7.	Promotional Expense Proration	15

ARTICLE III. CLOSING		16

3.1.	The Closing	16
3.2.	Seller Parties’ Closing Deliveries	16
3.3.	Buyer’s Closing Deliveries	19

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLER		20

4.1.	Corporate Organization	20
4.2.	No Violation	21
4.3.	Authority	21
4.4.	Realty	22
4.5.	Compliance with Laws	22
4.6.	Financial Statements and Condition	22
4.7.	Consents and Approvals	23
4.8.	Absence of Certain Changes or Events	23
4.9.	Payment of Taxes	23
4.10.	Owned Real Property	24
4.11.	Leased Real Property	24
4.12.	Tangible Personal Property	25

4.13.	Vehicles; Routes; Personal Property Leases; Prepaid Expenses; Promotional Accruals	25
4.14.	Litigation	26
4.15.	Intellectual Property	26
4.16.	Permits	27
4.17.	Contracts	27
4.18.	No Other Agreement	29
4.19.	Employee Plans	30
4.20.	Labor and Employee Matters	31
4.21.	Hazardous Substances	32
4.22.	Brokers’ Fees and Commissions	33
4.23.	Consumable Inventory	33
4.24.	Certain Payments	33
4.25.	Customers	34
4.26.	LOI Compliance	34

ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER		34

5.1.	Corporate Organization	34
5.2.	Authority	34
5.3.	No Violation	35
5.4.	Consents and Approvals	35
5.5.	Brokers’ Fees and Commissions	35
5.6.	Litigation	35
5.7.	Investigation By Buyer	35
5.8.	Availability of Financing	36

ARTICLE VI. COVENANTS		36

6.1.	Conduct of DSD Business Prior to the Closing	36
6.2.	Employees and Employee Benefits	37
6.3.	Access to Information	40
6.4.	Historical Financial Statements	40
6.5.	Public Announcements	42
6.6.	Supplements to Schedules	42
6.7.	Mixed Use Contracts	43
6.8.	Release of Certain Obligations	44
6.9.	Access to Records; Facilities	44
6.10.	Buyer’s Insurance	44
6.11.	Confidentiality Agreement	45
6.12.	Tax Matters	46
6.13.	Use of Names	47
6.14.	Negative Covenant	47

6.15.	IT Carve Out	48
6.16.	Brew Equipment Service; DSD Referral	48
6.17.	Shared Customers	49
6.18.	Limited Non-Competition	49
6.19.	Nonsolicitation of Certain Employees	49
6.20.	Accounts Receivable	50
6.21.	Removal of Brew Equipment Inventory	51
6.22.	Return of Consumable Inventory	51
6.23.	Further Assurances	51
6.24.	Buyer’s Pre-Closing Conduct	52
6.25.	Labor Contracts	52
6.26.	Embodiments of DSD Intellectual Property	52
6.27.	Authorized Information	53
6.28.	Buyer Financing	53

ARTICLE VII. CONDITIONS TO CLOSING		54

7.1.	Conditions to Obligations of Buyer	54
7.2.	Conditions to Obligations of the Seller Parties	55

ARTICLE VIII. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION		55

8.1.	Survival of Representations and Warranties	55
8.2.	Seller’s Indemnification	56
8.3.	Buyer’s Indemnification	57
8.4.	Indemnification Procedures	58
8.5.	Nature of Other Liabilities	60
8.6.	Indemnification Limits and Restrictions	60
8.7.	Additional Limitations of Liability	61
8.8.	Exclusive Remedy	62

ARTICLE IX. TERMINATION AND ABANDONMENT		62

9.1.	Methods of Termination	62
9.2.	Procedure and Effect of Termination	63

ARTICLE X. MISCELLANEOUS		63

10.1.	Notices	63
10.2.	Amendments; Waivers	64
10.3.	Successors and Assigns	64
10.4.	Construction; Interpretation; Certain Terms	64
10.5.	Severability	65

iii

10.6.	Counterparts	65
10.7.	Entire Agreement	65
10.8.	Governing Law; Consent to Jurisdiction; Venue	65
10.9.	Expenses	65
10.10.	Third-Party Beneficiaries	65
10.11.	Knowledge	66
10.12.	Title; Risk of Loss	66
10.13.	Waivers of Trial by Jury	66

ARTICLE XI. DEFINED TERMS		66

SCHEDULES AND EXHIBITS

Schedule

Schedule 1.1(a)-1: Certain DSD Business Marks

Schedule 1.1(a)-2: Certain DSD Business Marks

Schedule 1.1(c): Brew Equipment Inventory Methodology

Schedule 1.1(f): Personal Property Leases

Schedule 1.1(g)-1: Certain Included Contracts

Schedule 1.1(g)-2: Labor Contracts

Schedule 1.3(w): Other Excluded Assets

Schedule 2.1: Wire Transfer Instructions

Schedule 2.6(a): Historic Inventory Statement

Schedule 4.2: Consents

Schedule 4.4: Realty

Schedule 4.5: Compliance with Laws

Schedule 4.6-1: Seller’s Accounting Principles

Schedule 4.6-2: Financial Statements Exceptions

Schedule 4.6-3: DSD Business Definition

Schedule 4.7: Consents and Approvals

Schedule 4.8(a): Certain Developments

Schedule 4.8(b): Ordinary Course

Schedule 4.9: Payment of Taxes

Schedule 4.10(b): Subleasing Arrangements

Schedule 4.11: Leased Real Property

Schedule 4.12-1: Tangible Personal Property Liens

Schedule 4.12-2: Certain Tangible Personal Property

Schedule 4.13-1: Routes

Schedule 4.13-2: Owned Vehicles

Schedule 4.13-3: Certain Personal Property Leases

Schedule 4.13-4: Certain Personal Property Lease Exceptions

Schedule 4.13-5: Prepaid Expenses

Schedule 4.13-6: Promotional Accruals

Schedule 4.14: Litigation; Claims

Schedule 4.15: Intellectual Property

Schedule 4.16-1: Permits

Schedule 4.16-2: Compliance with Permits

Schedule 4.17(a): Material Contracts

Schedule 4.17(b): Enforceable Contracts

Schedule 4.19(a): Employee Plans

Schedule 4.19(c): Qualified Plans

Schedule 4.20(a): Labor Issues

Schedule 4.20(b): Information about Hired Personnel

Schedule 4.21: Hazardous Substances

Schedule 4.21(b): Third Party Reports

Schedule 4.23: Consumable Inventory

Schedule 4.26: LOI Compliance

Schedule 6.7: Mixed Use Contracts

Schedule 7.1(d): Permitted Exceptions

Schedule 7.1(e): Required Consents

Exhibit		Description

A		Facilities
B		Form of Note
C		Form of Security Agreement
D		Form of Seller Trademark License Agreement
E		Form of Buyer Trademark License Agreement
F		Form of Superior Trademark License Agreement
G		Form of Seller Transition Services Agreement
H		Form of Cappuccino and Cocoa Transition Agreement
I		Form of Buyer Co-Pack Agreement
J		Form of Seller Co-Pack Agreement
K		Form of Liquid Coffee Distribution Agreement
L		Form of Green Coffee and Tea Purchase Agreement
M		Form of Formula License Agreement
N		Form of Foreign Investment in Real Property Tax Act Affidavit
O		Form of Option Agreement
P		Historical Financial Statements

vii

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (“Agreement”), dated December 2, 2008, is made by and among Sara Lee Corporation, a Maryland corporation (“Seller”), Saramar, LLC, a Delaware limited liability company (“Saramar”) (Seller and Saramar are sometimes herein collectively referred to as the “Seller Parties” and each as a “Seller Party”), and Farmer Bros. Co., a Delaware corporation (“Buyer”). Capitalized terms used herein have the definitions referred to, or set forth in, Article XI.

RECITALS:

A. The Seller Parties are engaged in, among other things, the DSD Business.

B. Seller owns, directly or indirectly, one hundred percent (100%) of the issued and outstanding ownership interests of Saramar.

C. On October 24, 2008, Seller formed SL Realty, LLC, a wholly owned subsidiary in the State of Delaware (“Realty”). Seller formed Realty for the sole purpose of transferring to Realty, and causing Realty to lease and operate the Leased Real Property which Seller wishes to transfer, and Buyer wishes to acquire, as part of the transactions contemplated by this Agreement.

D. Seller engages in the manufacturing, processing, packaging, marketing, distributing and selling of coffee, tea and related products through its DSD Business, NSO Business and other businesses, each of which uses different methods to distribute product (which in some instances is the same or similar product) to customers, many of which purchase product from more than one of these businesses.

E. The Seller Parties desire to sell to Buyer, and Buyer desires to purchase from the Seller Parties, the assets of the DSD Business identified in Section 1.1, and the Seller Parties desire to delegate to Buyer and Buyer desires to assume the Assumed Liabilities, in each case on the terms and subject to the conditions hereinafter set forth.

Accordingly, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows.

ARTICLE I.
PURCHASED ASSETS; ASSUMED LIABILITIES

1.1. Purchased Assets. At the Closing and in reliance upon the representations, warranties and agreements and subject to the conditions set forth in this Agreement, the Seller Parties shall sell, assign, transfer, convey and deliver to Buyer, free and clear of all liens, Claims, options, charges, security interests, pledges, rights, mortgages or other encumbrances whatsoever (collectively, “Liens”), other than Permitted Liens, and Buyer shall purchase from the Seller Parties, for the Purchase Price, all of the Seller Parties’ right, title and interest in the following

items, other than any Excluded Assets (all of such assets, properties and rights being acquired hereby are collectively called the “Purchased Assets”):

(a) DSD Intellectual Property. (i) The Trademarks and Trade Names listed on Schedule 1.1(a)-1 attached hereto, including domain names incorporating the same, in each case whether registered or not, and wherever such rights exist, subject to the terms of the Buyer Trademark License Agreement and the Superior Trademark License Agreement, together with the right to recover for any past infringement thereof; (ii) all Seller Parties’ rights in the United States to the Trademarks and Trade Names listed on Schedule 1.1(a)-2 attached hereto, whether registered or not, together with the right to recover for any past infringement thereof (clauses (i) and (ii) being collectively called the “DSD Business Marks”), (iii) the Houston Software, and (iv) all Other Intellectual Property of the Seller Parties that relates only to the DSD Business or the DSD Business Marks, whether registered or not, the right to recover for any past infringement thereof, and the right to protection of interests therein (clauses (i) through (iv) being collectively called the “DSD Intellectual Property”);

(b) Tangible P&E. (i) All Owned Vehicles, (ii) all furniture, fixtures, equipment, machinery, spare parts, tools, supplies and other tangible personal property, other than Owned Vehicles, owned by Seller which at Closing are located at, or in transit to, the Transferred Facilities or on the Vehicles, (iii) all desktop computers which at Closing are located at or in transit to the Transferred Facilities, and all laptop computers and hand held computer devices which at Closing are in the possession of Hired Personnel, and (iv) the AS 400 computer server located at the Houston Plant (all of the foregoing, other than Consumable Inventory and Brew Equipment, whether or not exclusively related to the DSD Business, being collectively called the “Tangible P&E”). For the avoidance of doubt, Tangible P&E shall not include desktop computers located at Seller’s Downers Grove, IL location;

(c) Brew Equipment Inventory. (i) All Brew Equipment Inventory distributed by the DSD Business to DSD Customers and in the control of or in transit to such customers as of the Closing; (ii) twenty-one percent (21%) (or such greater percentage as Seller may choose to provide to Buyer) of the Brew Equipment Inventory related to Liquid Coffee (it being agreed that such Brew Equipment Inventory shall include both new Machines and Machines which are used/awaiting refurbishment in such proportion as Seller owns such Machines immediately prior to the Closing), which shall consist of (A) 100% of such Brew Equipment Inventory located on the Vehicles as of the Closing and (B) the remainder of such Brew Equipment Inventory to be selected from such Brew Equipment Inventory that is located at or in transit to the Facilities and Seller’s Washington, PA Facility as of the Closing, and (iii) forty-two percent (42%) (or such greater percentage as Seller may choose to provide to Buyer) of the Brew Equipment Inventory that is not related to Liquid Coffee (it being agreed that such Brew Equipment Inventory shall include both new Machines and Machines which are used/awaiting refurbishment in such proportion as Seller owns such Machines immediately prior to the Closing), which shall consist of (A) 100% of such Brew Equipment Inventory located on the Vehicles as of the Closing and (B) the remainder of such Brew Equipment Inventory to be selected from such Brew Equipment

Inventory that is located at or in transit to the Facilities and Seller’s Washington, PA Facility as of the Closing. Any Brew Equipment Inventory to be selected from the Facilities or Seller’s Washington, PA Facility as of the Closing shall be selected based upon the methodology set forth in Schedule 1.1(c). Upon signing this Agreement, Seller is providing Buyer with a list maintained by Seller in the ordinary course of the DSD Business of the Brew Equipment Inventory located at DSD Customers as of October 2, 2008; provided, Seller makes no representation or warranty regarding the accuracy of such list;

(d) Consumable Inventory. All Consumable Inventory at Closing (i) located at the Transferred Facilities, Buyer Sites or, except for green coffee and tea, in transit to the Transferred Facilities or Buyer Sites regardless of whether related exclusively to the DSD Business; and (ii) in transit to the locations of DSD Customers pursuant to DSD Business transactions (the “Purchased Consumable Inventory”);

(e) Real Estate. One hundred percent (100%) of the equity interest of Realty (being all of the equity of Realty) and each parcel of the Owned Real Property;

(f) Personal Property Leases. (i) The leases listed on Schedule 1.1(f), but only to the extent relating to the Leased Vehicles listed on Schedule 1.1(f), including all Seller’s rights with respect to such Leased Vehicles, (ii) the leases of other personal property used exclusively by the DSD Business, including all Seller’s rights with respect to the underlying personal property, and (iii) the leases of personal property listed on Schedule 4.13-3, to the extent related to the DSD Business, including all Seller’s rights with respect to the underlying personal property to the extent related to the DSD Business (clauses (i) through (iii) being collectively called the “Personal Property Leases”);

(g) Contracts. All Contracts to which either of the Seller Parties or Realty is a party or is bound which (i) relate exclusively to the DSD Business or the other Purchased Assets (excluding any individual employment contracts, collective bargaining agreements, employee welfare and pension plans, severance plans and related documents); (ii) are Contracts listed in Schedule 1.1(g)-1, such schedule to include the Sauce Supply Agreement; or (iii) to the extent related to the Hired Personnel, are collective bargaining agreements and other contracts listed on Schedule 1.1(g)-2 (“Labor Contracts”) (clauses (i) through (iii) being called the “DSD Contracts”) (said DSD Contracts, together with the Real Property Leases and the Personal Property Leases, being collectively called the “Purchased Contracts”);

(h) Permits. All Permits relating exclusively to the DSD Business and all Permits relating exclusively to the Transferred Facilities (regardless of whether the Transferred Facilities relate exclusively to the DSD Business), to the extent such Permits are transferable and to the extent not transferred to Realty prior to the Closing;

(i) Mixed Use Contracts. The benefits arising after the Closing Date under the Mixed Use Contracts to the extent such benefits are related to the DSD Business, all pursuant to the terms and conditions of Section 6.7;

(j) Books and Records. All (i) business records, tangible data, documents, files, DSD Customer lists, supplier lists, sales records (but in the case of Shared Customers, relating only to DSD Business transactions), business and marketing plans, creative materials, advertising, promotional materials, price lists, returned goods records, blueprints, specifications, designs, drawings, plans, operation or maintenance manuals, bids, invoices, sales literature, and all other books and records (collectively, “Information”), in each case which relate exclusively to the DSD Business or DSD Business transactions (but excluding (A) all Tax returns and all worksheets, notes, files or documents primarily related thereto, wherever located, (B) all documents prepared in connection with the transactions contemplated by this Agreement and all minute books and corporate records of the Seller Parties, (C) all Information of the Seller Parties which is not related exclusively to the DSD Business or DSD Business transactions, it being agreed, however, that (i) all Information relating to Shared Customers to the extent such Information relates to DSD Business transactions shall be included in the Purchased Assets, and (ii) to the extent any Seller Party possesses Information which relates to the DSD Business and any other business operated by such Seller Party, Buyer shall have access to the portion of such Information relating exclusively to the DSD Business or DSD Business transactions to the extent set forth in Section 6.9(b), (D) all Information which is more than three (3) years old other than any blueprints, specifications, designs, drawings, plans and operation or maintenance manuals related exclusively to the Tangible P&E or the Transferred Facilities; it being agreed, however, that Buyer shall have access to such Information to the extent set forth in Section 6.9(b), and (E) all management information systems (other than the Houston Software and the assets described in Section 1.1(b), subject to Buyer’s right to use the systems as described in Section 6.15) and (ii) personnel records relating to Hired Personnel who become employees of Buyer at Closing (collectively, the “Books and Records”);

(k) Telephone Numbers. All telephone numbers, facsimile numbers, and white- and yellow-page listings related only to the Transferred Facilities and cell phone accounts of the Hired Personnel maintained by Seller;

(l) Goodwill. All goodwill associated with the DSD Business and DSD Intellectual Property (including goodwill generated both with Exclusive Customers and Shared Customers to the extent related to DSD Business transactions);

(m) Prepaid Expenses. All prepaid expenses related solely to the DSD Business and characterized as such on the Books and Records in a manner consistent with Seller’s past practices and the Accounting Principles, including deposits held under Purchased Contracts (“Prepaid Expenses”), subject to adjustment under Section 2.1;

(n) Warranties. To the extent assignable to Buyer and subject to Section 1.3(u) below, all of the Seller Parties’ rights under or pursuant to all product and service warranties solely to the extent relating to or arising in connection with the Purchased Assets or operation of the DSD Business; and

(o) Closing Routes. The Closing Routes.

1.2. Limitations on Assignability. Subject to Section 1.4(b), to the extent that any of the Purchased Assets are not assignable without the consent of a third party, neither this Agreement, nor any of the instruments or documents executed and delivered in connection herewith or contemplated hereby, shall constitute an assignment or assumption thereof, or attempted assignment or attempted assumption thereof, if such assignment or attempted assignment, or assumption or attempted assumption, would constitute a breach thereof. If there are assignment consents that are not obtained by the Seller Parties by the Closing Date, the Seller Parties shall use commercially reasonable efforts (but Seller Parties shall not be required to pay any third party in exchange for such consent) to obtain all such consents as soon as reasonably practicable after the Closing Date and thereafter assign to Buyer such non-assignable Purchased Assets. Following any such assignment, such assets shall be deemed Purchased Assets and the liabilities thereunder (to the extent provided herein) shall be deemed Assumed Liabilities for purposes of this Agreement. After the Closing and prior to obtaining any required consent, the Seller Parties shall cooperate with Buyer in any reasonable arrangement designed to provide Buyer with the benefits of the non-assignable Purchased Assets and Buyer shall perform all corresponding liabilities and obligations of Seller Parties relating thereto to the extent the same would have been Assumed Liabilities hereunder had the consent been obtained as of the Closing.

1.3. Excluded Assets. The “Excluded Assets” shall consist of all assets, properties, rights and interests not included in the definition of the term “Purchased Assets.” Without limiting the foregoing, and without creating any implication that an asset or property would be a Purchased Asset if not set forth below, the Excluded Assets shall include the following, together with any assets, Claims, causes of action, choses in action, rights of recovery or rights of set-off of any kind against any Person arising out of or relating to any of the following:

(a) Retained Coffee Food Service Business. The Coffee Food Service Business other than the DSD Business;

(b) Liquid Coffee Concentrate Business. Seller’s business of manufacturing, processing, packaging, marketing, distributing and selling to any customer, by any means of delivery or distribution, coffee in the form of liquid coffee concentrate and related products, including milk and chocolate (such liquid coffee concentrate and related products being called “Liquid Coffee” and said business being called the “Liquid Coffee Business”), including the Douwe Egberts brand and related products (other than liquid coffee Machines distributed in DSD Business transactions); provided that Buyer will be entitled to distribute and sell Liquid Coffee pursuant to the terms of the Liquid Coffee Distribution Agreement;

(c) Certain Tangible Personal Property. All furniture, fixtures, equipment, desktop computers, machinery, spare parts, tools, supplies and other tangible personal property which at Closing are not located at or in transit to a Transferred Facility or on any Vehicle (other than (A) the Owned Vehicles, (B) laptop computers and hand held computer devices which at Closing are in the possession of any Hired Personnel, and (C) the AS 400 computer server located at the Houston Plant, it being understood that the items in clauses (A) through (C) hereof shall be included in the Purchased Assets);

(d) Certain Brew Equipment Inventory. All Brew Equipment Inventory which is not part of the Purchased Assets.

(e) Excluded Contracts. All Contracts, including Mixed Use Contracts (other than those which are specifically Purchased Contracts) and Contracts for the purchase of green coffee, tea, liquid coffee concentrate, cappuccino and cocoa products, Machines and Spare Parts, and Contracts relating to software and information technology services or products, and Contracts marked with an asterisk (*) on Schedule 4.17(a) (it being understood that this clause (e) shall not limit the rights of Buyer under Section 1.1(i));

(f) Cash and Cash Equivalents and Deposits. All cash, bank accounts, cash equivalents and other similar types of investments, certificates of deposit, U.S. Treasury bills and other marketable securities and all advances and deposits other than Prepaid Expenses included within the meaning of the Purchased Assets;

(g) Receivables; Etc. All accounts receivable and other receivables, billed and unbilled, and all negotiable instruments, or other instruments and chattel paper, as are payable to any Seller Party, and all Claims for refund or credit, including Tax refunds and any other Claims not part of the Purchased Assets;

(h) Insurance. All insurance policies, programs, reserves and related bonds of any nature (and any dividends or claims payable in respect thereof), including those covering the DSD Business prior to the Closing;

(i) Permits. All Permits not relating exclusively to the DSD Business (other than Permits exclusively relating to the Transferred Facilities, regardless of whether such Transferred Facilities are exclusively related to the DSD Business) and all Permits not transferable to Buyer. Permits that are Excluded Assets shall include all franchise, Tax, sales and use Permits of the Seller Parties;

(j) DSD Management Systems. Other than the Houston Software and the assets related to the management information systems described in Section 1.1(b), (all of which constitute part of the Purchased Assets), the management information systems and related services utilized at any of the Facilities (subject to Buyer’s right to use the systems described in Section 6.15) (it being understood, however, that Seller shall have obligations to provide certain

IT services to Buyer following the Closing Date pursuant to the terms of the Seller Transition Services Agreement);

(k) Centralized Services. All administrative and corporate services of Seller, all services related to any business or operation of Seller or any of its Affiliates in addition to the DSD Business (it being understood, however, that Seller has obligations to provide certain services to Buyer following the Closing Date pursuant to the terms of the Seller Transition Services Agreement);

(l) Employee Plans. All Employee Plans and all rights and interests under (including those of sponsor and administrator, as applicable), and all assets of, any employee benefit plan maintained by Seller or any of its Affiliates for the benefit of employees which include, but are not limited to, the Hired Personnel;

(m) Cappuccino and Cocoa; Formulas and Blends. The cappuccino and cocoa recipes and all coffee and other formulas and blends of products sold by the DSD Business; provided that Buyer will be entitled to distribute and sell certain of Seller’s cocoa and cappuccino products pursuant to the terms of the Cappuccino and Cocoa Transition Agreements and shall have the right to use certain coffee, tea and other related product formulas set forth on Exhibit A of the Formula License Agreement which were used by Seller in the DSD Coffee Business or manufactured in the Houston Plant prior to the Closing Date, pursuant to the terms of the Formula License Agreement;

(n) Sauce Business. The Sauce Business other than the DSD Sauce Business;

(o) Retained Claims. Any and all Claims and rights to recovery of the Seller Parties against any Person, whether now existing or arising in the future, to the extent related to or arising from or in connection with the DSD Business prior to the Closing Date (other than as provided in Section 1.1(a)), the Excluded Assets, or the Excluded Liabilities;

(p) Agreement Rights. The Seller Parties’ rights under this Agreement and any Additional Documents;

(q) Real Property. The property which is subject to the Option Agreement and all Facilities other than Transferred Facilities;

(r) Excluded Intellectual Property. All Trademarks, Trade Names and Other Intellectual Property including rights to recover for past infringement thereof, to the extent that such Trademarks, Trade Names and Other Intellectual Property are not DSD Intellectual Property. Without limiting the foregoing, (i) the Douwe Egberts Trade Name, related Trademarks and related Other Intellectual Property, and (ii) the Suntipt Trade Name, related Trademarks, and related Other Intellectual Property outside of the United States as well as domain names relating to the Suntipt Trade Name;

(s) Excluded Goodwill. All goodwill associated with the businesses of Seller other than the DSD Business and DSD Intellectual Property (including goodwill generated with Shared Customers to the extent not related to DSD Business transactions);

(t) Websites. All of Seller’s websites, including each such site’s content, look and feel, verbiage and images, but not including any domain names or DSD Intellectual Property (subject to the Buyer Trademark License Agreement and the Superior Trademark License Agreement) which are part of the Purchased Assets, it being understood that Buyer operates or will operate one or more websites using the domain names owned by Buyer which may contain information of a similar subject matter as one or more of Seller’s websites;

(u) Certain Warranty Rights. All rights under or pursuant to all product and service warranties relating to or arising in connection with (i) any Excluded Liability, or (ii) the ownership of the Purchased Assets or operation of the DSD Business on or prior to the Closing Date;

(v) Certain Consumable Inventory. All Consumable Inventory located at Seller’s Bensenville, IL distribution center and all green coffee and tea in transit to the Transferred Facilities and Buyer Sites; and

(w) Other Excluded Assets. The assets listed on Schedule 1.3(w).

1.4. Assumption of Liabilities. At the Closing, Buyer shall assume and agree to discharge and perform when due the following Liabilities of the Seller Parties (the “Assumed Liabilities”).

(a) Permitted Liens. All Liabilities relating to the Permitted Liens;

(b) Executory Liabilities. Notwithstanding Section 1.2 to the contrary, obligations arising after the Closing Date for future performance and any Liabilities arising from or relating to such future performance under each of the Purchased Contracts and those obligations arising after the Closing Date for future performance and any Liabilities arising from or relating to such future performance under the portion of each of the Mixed Use Contracts required to be assumed or performed pursuant to Section 6.7; provided, however, Assumed Liabilities shall not include any Liabilities (i) for or resulting from a breach by any Seller Party of any Purchased Contracts or any Mixed Use Contracts occurring on or prior to the Closing Date (other than any breach arising on account of a transfer pursuant to this Agreement of any Purchased Contact or Mixed Use Contract without the receipt of any necessary consent or waiver), or (ii) under any Mixed Use Contracts (or portion thereof) not required to be assumed or performed by Buyer pursuant to Section 6.7;

(c) Environmental Liabilities. Environmental Liabilities related to the Transferred Facilities, subject to any indemnification obligation of Seller for breach of any of the representations and warranties set forth in Section 4.21;

(d) Pension Liabilities. Pension liabilities under Multiemployer Plans with respect to the employees of the DSD Business to be hired by Buyer at Closing; provided, however, that if Buyer discontinues operations at the Hayward, CA Facility during the 180-day period following the Closing, Seller will indemnify and hold Buyer harmless for any withdrawal liability in excess of $60,000.00 which is incurred by Buyer under the Multiemployer Plans related to said Facility on account of such shutdown. Notwithstanding the foregoing, any Liability under the Multiemployer Plans for contributions required to be paid for a period prior to Closing (but only for the dollar amount of contributions, charges or increases required to have been made by Seller on or prior to Closing and not for any contributions, charges or increases required to be paid after Closing or for any other adjustments to contribution amounts after the Closing), or for a withdrawal or partial withdrawal occurring prior to the Closing shall not be an Assumed Liability;

(e) Advertising and Trade Promotion Expenses. All Liabilities for advertising, trade promotions and customer rebates relating exclusively to the DSD Business (collectively, “Promotional Expenses”) with respect to the period after the Closing Date; provided, however, that in the case of Promotional Expenses that relate to periods that extend both before and after the Closing Date, the parties shall allocate such Promotional Expenses based upon the relative benefits received by Seller Parties prior to the Closing Date (such amount to be an Excluded Liability) and the benefits received by Buyer following the Closing Date (such amount to be an Assumed Liability) in accordance with Section 2.7. The parties shall share with one another all relevant information to make this allocation in accordance with such relative benefits;

(f) Utilities, Taxes, Etc. Pursuant to Section 2.3, a pro-rated portion of (i) the real property Taxes for Owned Real Property, (ii) in the case of the Houston Plant and the Oklahoma City Plant, water, gas, electricity and other utilities relating to such plants, and (iii) in the case of all the Purchased Assets, personal property Taxes, plus any additional amounts which may be due based on actual bills versus amounts estimated pursuant to Section 2.3 (it being agreed that if Seller paid more than its pro rata portion based on such estimates, Buyer shall have no refund obligation to Seller); and

(g) Accrued Vacation. Subject to Section 6.2(a), accrued vacation as of the Closing Date for Hired Personnel.

Assumption by Buyer of the Assumed Liabilities shall not in any way enlarge any of the rights of any third parties relating to any such Assumed Liability.

1.5. Excluded Liabilities. The “Excluded Liabilities” shall consist of all Liabilities of the Seller Parties other than the Assumed Liabilities, except the foregoing shall not limit in any way Buyer’s indemnity obligation under Section 8.3(b).

1.6. DISCLAIMER OF WARRANTIES. EXCEPT AS SET FORTH IN ARTICLE IV, THE PURCHASED ASSETS ARE SOLD “AS IS”, “WHERE IS” AND NO

SELLER PARTY MAKES OR HAS MADE ANY REPRESENTATION OR WARRANTY REGARDING THE PURCHASED ASSETS. WITHOUT LIMITING THE FOREGOING, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NO SELLER PARTY MAKES ANY REPRESENTATION OR WARRANTY AS TO THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OF ANY PURCHASED ASSETS OR ANY OTHER REPRESENTATIONS OR WARRANTIES ARISING BY STATUTE OR OTHERWISE IN LAW, FROM A COURSE OF DEALING OR USAGE OF TRADE, OR OTHERWISE. ALL SUCH OTHER REPRESENTATIONS AND WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED BY THE SELLER PARTIES.

ARTICLE II.
PURCHASE PRICE

2.1. Purchase Price.

(a) The aggregate purchase price (the “Purchase Price”) to be paid by Buyer for the Purchased Assets shall be $45,390,000.00, as adjusted pursuant to this Article II. In accordance with Sections 2.1(b) and 3.1, the Buyer shall pay to Seller an amount (“Closing Payment”) equal to $45,390,000.00, plus the amount of the Vacation Reimbursement, if any, plus the balance of any amounts owed to Seller by Buyer pursuant to Sections 6.4 and 6.15, plus or minus the following: the amount of any Estimated Inventory and Prepaid Excess shall be added and the amount of any Estimated Inventory and the Prepaid Shortfall shall be subtracted. In order to calculate the Closing Payment, Seller shall deliver to Buyer at least two (2) business days before the Closing Date an estimated calculation, which shall be prepared by Seller in good faith, of the value of the Consumable Inventory to be reflected on the Closing Inventory Statement and the Prepaid Expenses (itemizing each Prepaid Expense) which are part of the Purchased Assets (the “Estimated Inventory and Prepaid Value”). The amount by which the Estimated Inventory and Prepaid Value exceeds $22,000,000.00 shall be called the “Estimated Inventory and Prepaid Excess” and the amount by which the Estimated Inventory and Prepaid Value is less than $22,000,000.00 shall be called the “Estimated Inventory and Prepaid Shortfall”. The Estimated Inventory and Prepaid Value shall be prepared, with respect to Consumable Inventory in accordance with the Valuation Methodology described in Section 2.6(a), and with respect to the Prepaid Expenses which are part of the Purchased Assets, in accordance with Seller’s Accounting Principles.

(b) The Closing Payment shall be paid by wire transfer of same day funds to the account set forth in Schedule 2.1 at Closing, except that if Buyer has not consummated the Bank Financing as of the Closing Date, then Buyer shall have the right to pay up to $20,000,000 of the Closing Payment in the form of a secured promissory note, said note to be payable to Seller in the form attached hereto as Exhibit B (the “Note”). The Note shall be secured by the collateral set forth in that certain Continuing Security Agreement dated the Closing Date, duly executed and delivered to Seller by Buyer in the form of Exhibit C (the “Security Agreement”).

2.2. Allocation. The Purchase Price shall be allocated among the Purchased Assets as agreed to by the parties; provided that such allocation shall be subject to necessary adjustments, to be completed and reflected in such allocation within ten (10) days following the issuance of the Final Closing Statements, on account of the final Consumable Inventory and Prepaid Expense Valuation under Section 2.6. The parties shall file Internal Revenue Service Form 8594 with the Internal Revenue Service (“IRS”) reflecting such allocation in accordance with Section 1060 of the Code, and shall agree and ensure that all federal, state, local and foreign Tax returns which they file reflect such allocation. Each party shall promptly provide the other party with any other information required to complete IRS Form 8594.

2.3. Prorations.

(a) On the Closing Date, (i) the real property Taxes relating to the Owned Real Property, (ii) in the case of the Houston Plant and the Oklahoma City Plant, the water, gas, electricity and other utilities, and (iii) in the case of all the Purchased Assets wherever located, personal property Taxes, shall each be prorated between Buyer and Seller effective as of the Closing Date. To the extent practicable, utility meter readings for the Houston Plant and the Oklahoma City Plant shall be determined as of the Closing Date and, if not available, will be estimated by the parties. If the final real property Tax rate or final assessed value for the current Tax year is not established by the Closing Date, the prorations shall be made on the basis of ninety-five percent (95%) of the rate or assessed value in effect for the most current ascertainable Tax year. Prorations shall be made on the principle that Seller shall be responsible for real property Taxes relating to the Owned Real Property, utilities relating to the Houston Plant and the Oklahoma City Plant, and personal property Taxes related to the Purchased Assets allocable to the periods or portions of periods ending on or prior to the Closing Date, and Buyer shall be responsible for real property Taxes relating to the Owned Real Property, utilities relating to the Houston Plant and the Oklahoma City Plant and personal property Taxes related to the Purchased Assets allocable to the period or portions of periods beginning after the Closing Date.

(b) With respect to each personal property tax return required to be filed on or prior to the Closing Date, Seller shall prepare and file each such tax return consistent with its past practice. The allocation of personal property Taxes between the parties shall be made at Closing (i) based upon the value of the Purchased Assets (and no other property) as reflected in the applicable personal property tax return in the case of returns filed for the year in which the Closing occurs, or (ii) in the case of returns not yet filed for the year in which the Closing occurs, based upon the value of the Purchased Assets (and no other property) determined by Seller consistent with its past practices in filing personal property tax returns (which in no event shall take into account the Purchase Price or any contrary methodologies advanced by Buyer).

2.4. Income Taxes. All Taxes in respect of the income of the DSD Business for the period or portions of periods ending on or prior to the Closing Date shall be borne by the Seller Parties. All Taxes in respect of the income of the DSD Business for the period or portions of periods beginning after the Closing Date shall be borne by Buyer.

2.5. Closing Costs, Transfer Taxes and Fees.

(a) Buyer and Seller shall each pay fifty percent (50%) of the cost of any transfer Taxes, sales, use or other Taxes or fees imposed by reason of the transfer of the Purchased Assets (provided that in no event shall Buyer be liable for any Tax in respect of income imposed on any of the Seller Parties resulting from their sale of the Purchased Assets to Buyer), costs of applying for new permits and obtaining the transfer of existing permits, all fees and costs of recording or filing all conveyancing instruments, all fees and costs of obtaining title insurance on the Owned Real Property as set forth in Section 7.1(d) herein, including the costs and surveys necessary to delete the standard printed form Title Policy exception for matters shown by survey (which title insurance fees and costs shall not exceed $50,000.00 in the aggregate, it being agreed that Buyer shall be liable for one hundred percent (100%) of title insurance fees and costs in excess of $50,000.00), and the fees and costs of recording or filing all UCC termination statements and other releases of Liens other than Permitted Liens (but not the amount of such Liens). For the avoidance of doubt, Buyer and Seller shall each pay fifty percent (50%) of the cost of any transfer, sales, use or other Taxes or fees imposed by reason of the transfer of the Leased Real Property to Realty. Notwithstanding anything to the contrary herein, Seller shall not be liable for the administrative cost of transferring title (tags only) imposed in connection with registering any Vehicles with any Governmental Authority in the name of Buyer following the Closing, it being understood, however, that the costs of all other transfer Taxes, sales, use or other Taxes or fees imposed by reason of the transfer of the Vehicles on the Closing Date shall be paid fifty percent (50%) by Seller and fifty percent (50%) by Buyer. The sales, use and transfer Tax returns required by reason of said transfer shall be timely prepared and filed by the party normally obligated by Applicable Law to make such filing. The parties agree to cooperate with each other in connection with the preparation and filing of such returns, in obtaining all available exemptions from such sales, use and transfer Taxes, and in timely providing each other with resale certificates and any other documents necessary to satisfy any such exemptions.

(b) If any party (or any of its Affiliates) pays any Tax or fee required to be shared by the parties or paid by the other party under Section 2.5(a), the owing party shall promptly (within twenty (20) days) reimburse the paying party for the amounts so owed. If any party (or any of its Affiliates) receives any refund or credit of any Tax or fee to which another party is entitled under Section 2.5(a), the receiving party shall promptly (within twenty (20) days) pay such amounts to the party entitled thereto.

2.6. Post-Closing Consumable Inventory and Prepaid Expense Adjustment.

(a) Schedule 2.6(a) is a statement setting forth the type and value of the Consumable Inventory of the DSD Business owned by Seller as of June 28, 2008, which statement was prepared by Seller in a manner consistent with past practices used by Seller to value Inventory of the DSD Business (said statement being called “Historic Inventory Statement”). Two (2) business days before the Closing Date, Seller shall cause a physical count of the Consumable Inventory constituting part of the Purchased Assets at both the Transferred Facilities and Buyer Sites (subject only to additions and deletions made by Seller in the ordinary course of the DSD Business from the time of the physical inventory to the Closing Date). Representatives of both parties and their respective agents, including auditors, may be present during the inventory count and each party shall be responsible for its costs, including fees of its auditors and Representatives. Based upon this physical inventory, Seller shall prepare and deliver to Buyer, within sixty (60) days following the Closing Date, a statement setting forth the type and value of the Consumable Inventory as of the Closing Date (“Closing Inventory Statement”), which shall be prepared in a manner consistent with the Historic Inventory Statement, meaning that the valuation of Consumable Inventory as of the Closing Date shall be determined first, in accordance with the valuation principles articulated in the Historic Inventory Statement; second, if not articulated, then in accordance with valuation principles applied by Seller in the valuation of Inventory reflected in the Historic Inventory Statement; and third, if not reflected in the Historic Inventory Statement, in accordance with valuation principles used by Seller in a manner consistent with Seller’s past practices in valuing Inventory of the DSD Business (all of said valuation principles being collectively called the “Valuation Methodology” and none of which are inconsistent with Seller’s Accounting Principles). Buyer shall provide to Seller and its auditors and Representatives upon reasonable advance notice and during normal business hours access to the books and records, any other information, including work papers of its auditors, and to any employees of Buyer reasonably necessary for Seller to prepare the Closing Inventory Statement, to respond to Buyer’s Objection (as defined below) and to prepare materials for presentation to the CPA Firm (as defined below) in connection with Section 2.6(c). At the time Seller delivers the Closing Inventory Statement, Seller shall also deliver a statement of the Prepaid Expenses which were part of the Purchased Assets as of the Closing Date (the “Prepaid Statement” and, together with the Closing Inventory Statement being called “Closing Statements”).

(b) Buyer shall, within thirty (30) days after the delivery by Seller of the Closing Statements, complete its review thereof. After delivery of the Closing Statements, Seller shall make available to Buyer its auditors and Representatives, upon reasonable advance notice and during normal business hours, all books, records, work papers, personnel (including their accountants and employees) and other materials and sources used by Seller to prepare the Closing Statements. The Closing Statements shall be binding and conclusive upon, and deemed accepted by, Buyer unless Buyer shall have notified Seller in writing within thirty (30) days after delivery of the Closing Statements of any good faith objection thereto (the “Buyer’s Objection”). The Buyer’s Objection shall set forth a description of the basis of Buyer’s Objection and the adjustments to the value of Purchased Consumable Inventory reflected on the Closing Statements or adjustments to the Prepaid Expenses reflected on the Prepaid Statement which Buyer believes

should be made. Any items not disputed during the foregoing thirty (30) day period shall be deemed to have been accepted by Buyer.

(c) If Seller and Buyer are unable to resolve all of their disputes with respect to the Closing Statements within thirty (30) days following Seller’s receipt of Buyer’s Objection to such Closing Statements pursuant to Section 2.6(b), they shall refer their remaining differences to a nationally recognized firm of independent public accountants as to which Seller and Buyer mutually agree (the “CPA Firm”) for decision, which decision shall be final and binding on the parties. Any expenses relating to the engagement of the CPA Firm shall be shared equally by Seller, on the one hand, and Buyer, on the other hand. Seller and Buyer shall each bear the fees of their respective auditors incurred in connection with the determination and review of the Closing Statements. Buyer and Seller shall instruct the CPA Firm not to assign a value to any item in dispute greater than the greatest value for such item assigned to it by Buyer, on the one hand, or Seller, on the other hand, or less than the smallest value for such item assigned to it by Buyer, on the one hand, or Seller, on the other hand. Buyer and Seller shall also instruct the CPA Firm to make its determination based solely on the presentations of Buyer and Seller that are in accordance with the guidelines and procedures set forth in this Section 2.6 (i.e., not on the basis of an independent review).

(d) The Closing Statements shall become final and binding on the parties upon the earliest of (i) if no Buyer’s Objection has been given, the expiration of the period within which Buyer must make its objection pursuant to Section 2.6(b) hereof, (ii) the date of an agreement in writing by Seller and Buyer that the Closing Statements, together with any modifications thereto agreed by Seller and Buyer, shall be final and binding, and (iii) the date on which the CPA Firm shall issue its written determination with respect to any dispute relating to such Closing Statements. The Closing Statements, as submitted by Seller if no timely Buyer’s Objection has been given or as adjusted pursuant to any agreement between the parties or as determined pursuant to the decision of the CPA Firm, when final and binding on all parties, is herein referred to as the “Final Closing Statements.”

(e) Within five (5) business days following issuance of the Final Closing Statements, the net adjustment payment payable pursuant to this Section 2.6(e) (the “Adjustment Payment”) and interest thereon at the rate of three percent (3%) per annum shall be paid by wire transfer of immediately available funds to a bank account designated by Seller or Buyer, as the case may be, except that if the Note is outstanding at the time any Adjustment Payment is owed to Buyer, then in lieu of a wire transfer of the Adjustment Payment to Buyer, the Note shall be reduced by the amount of such Adjustment Payment plus any accrued interest thereon as required by this Section 2.6(e), said reduction to be applied first to the accrued and unpaid interest and then the balance to the principal amount of the Note. The Adjustment Payment shall be the difference, if any, between (x) the value of Purchased Consumable Inventory and Prepaid Expenses, as reflected on the Final Closing Statements, minus (y) the Estimated Inventory and Prepaid Value. The Adjustment Payment, if any, shall be payable by Buyer to Seller, if positive, and by Seller to Buyer, if negative.

2.7. Promotional Expense Proration.

(a) No later than fifteen (15) days after Buyer notifies Seller of a Promotional Expense that relates to periods that extend both before and after the Closing Date (a “Shared Promotional Expense”), Buyer and Seller shall meet to determine the amount of such Shared Promotional Expense allocable to the period on or prior to the Closing Date (a “Seller Expense Reimbursement”). Seller and Buyer shall cooperate in good faith in an effort to reach agreement upon the amount of a Seller Expense Reimbursement within ten (10) days of the initial meeting of Buyer and Seller with respect to such Seller Expense Reimbursement. The Seller Expense Reimbursement due with respect to any Shared Promotional Expense shall be computed by multiplying (A) the ratio of the Seller’s Promotional Sales over the Total Promotional Sales by (B) the Shared Promotional Expense in question. For purposes of this Section 2.7, the term “Seller’s Promotional Sales” means the sales of the DSD Business on or prior to the Closing Date that were attributable to the Shared Promotional Expense in question, and the term “Total Promotional Sales” means the total sales for the period attributable to the Shared Promotional Expense in question.

(b) In the event that Seller and Buyer are unable to reach an agreement on the Seller Expense Reimbursement within twenty (20) days of the initial meeting of Buyer and Seller with respect to such Seller Expense Reimbursement, they shall refer the calculation of the Seller Expense Reimbursement to the CPA Firm for decision, which decision shall be final and binding on the parties. Any expenses relating to the engagement of the CPA Firm shall be shared equally by Seller, on the one hand, and Buyer, on the other hand. Seller and Buyer shall each bear the fees of their respective auditors and other representatives incurred in connection with the determination and review of the Seller Expense Reimbursement. Buyer and Seller shall instruct the CPA Firm not to assign a value to the Seller Expense Reimbursement greater than the greatest value for such item assigned to it by Buyer, on the one hand, or Seller, on the other hand, or less than the smallest value for such item assigned to it by Buyer, on the one hand, or Seller, on the other hand. Buyer and Seller shall also instruct the CPA Firm to make its determination based solely on the presentations of Buyer and Seller that are in accordance with the guidelines and procedures set forth in this Section 2.7 (i.e., not on the basis of an independent review).

(c) Within five (5) business days following the determination of a Seller Expense Reimbursement pursuant to clause (a) or (b) above, Seller shall pay such Seller Expense Reimbursement to Buyer by wire transfer of immediately available funds to a bank account designated by Buyer, except that if the Note is outstanding at the time any Seller Expense Reimbursement is owed to Buyer, then in lieu of a wire transfer of the Seller Expense Reimbursement to Buyer, the Note shall be reduced by the amount of such Seller Expense Reimbursement, said reduction to be applied first to the accrued and unpaid interest and then the balance to the principal amount of the Note. In the event that Seller fails to timely pay any Seller Expense Reimbursement to Buyer, such Seller Expense Reimbursement shall accrue interest at the rate of three percent (3%) per annum. If Seller paid Buyer an amount in excess of the Seller

Expense Reimbursement prior to the resolution of such amount as provided in this Section 2.7, then Buyer shall pay such excess to Seller by wire transfer of immediately available funds to a bank account designated by Seller, together with accrued interest from the date of determination of the Seller Expense Reimbursement pursuant to clauses (a) or (b) above.

ARTICLE III.
CLOSING

3.1. The Closing. Subject to Article VII, the exchange of documents required to consummate the transactions contemplated by this Agreement shall take place at 10:00 a.m., central standard time, on Friday, January 30, 2009, at the offices of Sonnenschein Nath & Rosenthal LLP, located in Chicago, but consummation of the transaction (the “Closing”) shall be effective as of 11:59 p.m., eastern standard time, on Saturday, January 31, 2009 (the “Closing Date”); provided, however, that the cash portion of the Closing Payment (determined pursuant to Section 2.1) shall be tendered by Buyer to Seller by wire transfer of same day funds at such time as federally insured financial institutions open for business on Monday, February 2, 2009, in New York, New York, and the Note, if applicable, shall be physically tendered to Seller or its representatives by 9:00 a.m., central standard time, on Monday, February 2, 2009, at the offices of Sonnenschein Nath & Rosenthal LLP, located in Chicago; provided further, however, that such transactions may occur on such other dates, times or places as agreed to in writing by Buyer and Seller.

3.2. Seller Parties’ Closing Deliveries. Subject to the conditions set forth in this Agreement and to Section 1.2, at the Closing, simultaneous with Buyer’s deliveries hereunder, the Seller Parties shall deliver or cause to be delivered to Buyer the following documents, certificates and instruments, all in form and substance reasonably satisfactory to Buyer and its counsel.

(a) Realty Equity Interests. Assignment of membership interests (and a certificate issued in the name of Buyer in the event that such membership interests are certificated) evidencing the transfer of all the right, title and interest in and to all of the equity interest in Realty to Buyer.

(b) Instruments of Transfer. Duly-executed bills of sale, assignments of DSD Intellectual Property, vehicle title certificates and all such other instruments of sale, assignment and transfer as are necessary or appropriate to sell, assign and transfer to Buyer and to vest in Buyer all of the Seller Parties’ right, title and interest in the Purchased Assets, free and clear of all Liens other than Permitted Liens.

(c) Releases of Liens. Any necessary instrument or certificate, duly executed and in recordable form, to discharge or release, or cause to be discharged or released, any Lien, other than a Permitted Lien against the Purchased Assets or Lien related to any Assumed Liabilities.

(d) Operational Agreements. The following agreements, in each case duly executed by Seller Parties, it being agreed that only the agreement described in clause (viii) has been finalized by the parties and that the other agreements are to be negotiated and modified in a manner mutually satisfactory to the parties based upon the parties’ discussions and understandings as of the execution of this Agreement (collectively, the “Operational Agreements”):

(i) A Trademark License Agreement pursuant to which the Seller Parties grant to Buyer the right to use the Trademarks and Trade Names specified therein on the terms set forth therein (the “Seller Trademark License Agreement”), substantially in the form attached hereto as Exhibit D;

(ii) A Trademark License Agreement pursuant to which Buyer grants to Seller the right to use the DSD Business Marks for the purposes and on the terms set forth therein (“Buyer Trademark License Agreement”), substantially in the form attached hereto as Exhibit E;

(iii) A Trademark License Agreement pursuant to which Buyer grants to Seller the right to use the Trademarks and Trade Names specified therein in Canada and Mexico on the terms set forth therein (the “Superior Trademark License Agreement”), substantially in the form attached hereto as Exhibit F.

(iv) A Seller Transition Services Agreement (the “Seller Transition Services Agreement”) substantially in the form attached hereto as Exhibit G;

(v) A Cappuccino and Cocoa Transition Agreement with each of Seller’s two manufacturers pursuant to which Seller’s designees may supply to Buyer certain cappuccino and cocoa products on the terms set forth therein (each a “Cappuccino and Cocoa Transition Agreement”), substantially in the form attached hereto as Exhibit H (and subject to any reasonable modifications required by said manufacturers);

(vi) A Co-Pack Agreement pursuant to which Buyer will co-pack for Seller at the Houston Plant, for Seller’s NSO Business, certain varieties of Sara Lee Foodservice roast and ground coffee, tea and related products presently produced at the Houston Plant, whether or not related to the DSD Business, on the terms set forth therein (“Buyer Co-Pack Agreement”), substantially in the form attached hereto as Exhibit I;

(vii) A Co-Pack Agreement pursuant to which Seller will co-pack for Buyer at the St. Louis Park, Moonachie and Harahan Facilities to be retained by Seller, for Buyer’s operation of the DSD Business, certain varieties of roast and ground coffee and related products presently produced at those Facilities for the DSD Business, on the terms set forth therein (“Seller Co-Pack Agreement”), substantially in the form attached hereto as Exhibit J;

(viii) A Liquid Coffee Distribution Agreement pursuant to which Seller will sell Douwe Egberts brand Liquid Coffee concentrate and related products to Buyer and Buyer will distribute such Liquid Coffee concentrate and related products on the terms therein (“Liquid Coffee Distribution Agreement”), substantially in the form attached hereto as Exhibit K;

(ix) A Green Coffee and Tea Purchase Agreement pursuant to which Seller will purchase and supply to Buyer green coffee and tea on the terms therein (“Green Coffee and Tea Purchase Agreement”), substantially in the form attached hereto as Exhibit L; and

(x) A Formula License Agreement pursuant to which Seller will license to Buyer certain coffee, tea and other related product formulas set forth on Exhibit A to such agreement which were used by Seller in the DSD Coffee Business or manufactured in the Houston Plant prior to the Closing Date (“Formula License Agreement”), substantially in the form attached hereto as Exhibit M.

(e) Title Documents. The following documents, in each case duly executed by Seller:

(i) a Foreign Investment in Real Property Tax Act Affidavit in substantially the form of Exhibit N;

(ii) with respect to Owned Real Property, such affidavits and documents as may be reasonably required by the Title Company in connection with issuing the Title Policies covering such Owned Real Property;

(iii) such other documents and instruments reasonably necessary for the Title Company to issue any Title Policy (e.g., good standing certificates, authorizing resolutions, etc.); and

(iv) a special warranty deed conveying fee simple title to each parcel of the Owned Real Property to Buyer, duly executed by Seller or Seller’s Affiliate as to any parcel owned by an Affiliate of Seller.

(f) Certificate. The following certificates:

(i) a certificate executed by an officer of each Seller Party and Realty certifying in such officer’s official capacity and not in his or her individual capacity, the organizational documents and resolutions of the board of directors (or equivalent managing body, as applicable) authorizing the execution and delivery of this Agreement, Additional Documents and the consummation of transactions contemplated hereby and thereby;

(ii) an incumbency certificate from each Seller Party and Realty;

(iii) a certificate certifying the existence and good standing of each Seller Party and Realty issued by their respective states of incorporation or organization as of a date not more than ten (10) days prior to the Closing Date; and

(iv) a certificate executed by an officer of each Seller Party certifying in such officer’s official capacity and not in his or her individual capacity, that (i) the representations and warranties of the Seller Parties contained herein are true and correct in all material respects (except those qualified by materiality, which are true and correct in all respects) on and as of the Closing Date, subject to any Changes reflected in updates to the Schedules (the effect of such Changes and updates shall be as set forth in Section 6.6(a)), and (ii) the Seller Parties have performed and complied in all material respects with all of the agreements and covenants to be performed or complied with by them prior to and as of the Closing Date.

(g) Right of First Opportunity. An agreement in the form of Exhibit O duly executed by Seller, pursuant to which Buyer has the opportunity to acquire certain parcels of real property adjacent to the Houston Plant (“Option Agreement”).

(h) DSD Employee Information: Seller shall deliver (i) a listing setting forth the number, if any, of former full-time DSD Employees, by location of each such employee’s service, who left the employ of Seller within the ninety (90) day period preceding the Closing Date, whether the termination was voluntary or involuntary to the employee; and (ii) a list setting forth the accrued and unused vacation for DSD Employees as of a date no earlier than fourteen (14) days prior to the Closing Date.

(i) Real Property Lease Assignment. An Assumption and Assignment duly executed by Seller assigning the Real Property Leases to Realty and accepted by Realty.

(j) Security Agreement. A counterpart of the Security Agreement, if applicable, executed by Seller.

3.3. Buyer’s Closing Deliveries. Subject to the conditions set forth in this Agreement, at the Closing, simultaneous with the Seller Parties’ deliveries hereunder, Buyer shall deliver or cause to be delivered to Seller all of the following funds, documents and instruments, all in form and substance reasonably satisfactory to Seller and its counsel.

(a) Closing Payment. The Closing Payment, including, if applicable, the Note, in the form permitted under Section 2.1(b) and paid to Seller as set forth under Section 3.1.

(b) Operational Agreements. The Operational Agreements, in each case duly executed by Buyer.

(c) Officer’s Certificate. A certificate executed by an officer of Buyer certifying in such officer’s official capacity and not in his or her individual capacity, the Organizational

Documents and resolutions of the Board of Directors of Buyer authorizing the execution and delivery of this Agreement and the Additional Documents, and the consummation of transactions contemplated hereby and thereby.

(d) Bring-Down Certificate. A certificate executed by an officer of Buyer certifying in such officer’s official capacity and not in his or her individual capacity, that (i) the representations and warranties of Buyer contained herein are true and correct in all material respects (except those qualified by materiality, which are true and correct in all respects) on and as of the Closing Date, and (ii) Buyer has performed and complied in all material respects with all of the agreements and covenants to be performed or complied with by it prior to and as of the Closing Date.

(e) Incumbency Certificate. An incumbency certificate from Buyer.

(f) Insurance Certificate. A certificate issued by Buyer’s insurance carrier (or its agent) evidencing that the insurance coverages described in Section 6.10 are in full force and effect.

(g) Assumption of Liabilities Agreement. An agreement whereby Buyer assumes and agrees to pay, defend, discharge and perform when due each of the Assumed Liabilities.

(h) Right of First Opportunity. The Option Agreement, duly executed by Buyer.

(i) Security Agreement. A counterpart of the Security Agreement, if applicable, duly executed by Buyer, together with all instruments, transfer powers and other items required to be delivered in connection therewith.

ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLER

Subject to the disclosures set forth in the Schedules to this Agreement, Seller hereby represents and warrants to Buyer as set forth below as of the date hereof and, subject to Permitted Stipulated Updates pursuant to Section 6.6(a), as of the Closing Date. The disclosure of information in any Schedule shall qualify all representations and warranties to the extent such information is sufficiently clear to communicate the representations and warranties which it qualifies. The disclosure of any item or information in any Schedule shall not be construed as an admission that such item or information is required to be disclosed or is material to the DSD Business or any representation or warranty made by Seller. Information may be set forth in Schedules for informational purposes only and the Schedules do not necessarily include other matters of a similar nature.

4.1. Corporate Organization. Each Seller Party and Realty is duly organized, validly existing and in good standing under the laws of the state of its organization and in each other jurisdiction in which the ownership and leasing of its properties and assets or the conduct of its

business requires such qualification, except where such failure to qualify, in the case of each other jurisdiction, would not have a Material Adverse Effect, with all requisite organizational power and authority to own, lease and operate its properties and assets and to conduct its business as now, or then, being conducted. Neither Seller Party has any direct or indirect stock or other ownership interest (whether controlling or not) in any Person which engages in the United States in a business utilizing such Person’s network of facilities and vehicles to deliver coffees and teas directly to customer locations where such products are consumed.

4.2. No Violation. The execution, delivery and performance by either Seller Party of this Agreement and the other Additional Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby do not and will not, (a) conflict with or result in any violation of, or constitute a breach of any provision of the charter document or bylaws or operating or limited liability company agreement of such Seller Party or Realty, (b) except for consents and approvals set forth in Schedule 4.2, conflict with, result in a violation of or constitute a breach or default (or an event which, with notice or lapse of time or both, would constitute a default) under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, require notice under, or permit the termination of any Material Contract or Real Property Lease, (c) violate any Applicable Law, or (d) impose any Lien, restriction or charge on the Purchased Assets, including the Transferred Facilities or the DSD Business, except for Liens, restrictions or charges that would not, individually or in the aggregate, result in a Material Adverse Effect.

4.3. Authority. Each Seller Party has full power and authority to enter into this Agreement and the other Additional Documents to which it is a party and to consummate the transactions contemplated hereby and thereby, and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement, the Additional Documents to which it is a party, the consummation of the transactions contemplated hereby and thereby and the performance of Seller Parties’ obligations hereunder and thereunder have been duly authorized by the Seller Parties, and no other proceedings on the part of Seller Parties are necessary to authorize such execution, delivery and performance. This Agreement and the other Additional Documents to which any Seller Party is a party have been or will be duly and validly executed and delivered by each such Seller Party and, assuming the due execution and delivery of this Agreement and the Additional Documents by the other parties thereto, constitute or will constitute valid and binding legal obligations of each Seller Party to the extent a party thereto, enforceable against each such Seller Party to the extent a party thereto in accordance with their respective terms, except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights in general and subject to general principles of equity and the discretion of courts in granting equitable remedies.

4.4. Realty.

(a) Upon consummation of the transactions contemplated by this Agreement, Buyer will acquire good and valid title free and clear of all Liens to the equity interests of Realty, which represents 100% of the equity of Realty. The membership interests of Realty have been duly authorized and validly issued and are fully paid and non-assessable. There are no outstanding options, warrants or other rights exercisable for the purchase of, or securities convertible into, any equity interests of Realty or any agreements, contracts or commitments relating to the issuance, sale, transfer, redemption, acquisition or voting of any equity interests of Realty. The membership interests of Realty to be transferred to Buyer hereunder are the only issued and outstanding equity interests of Realty. Schedule 4.4 sets forth a true, correct and complete statement of the capitalization of Realty.

(b) Realty has not engaged in any business other than owning the Real Property Leases and operating the Leased Real Property and has no Liabilities other than those which constitute Assumed Liabilities in Section 1.4.

4.5. Compliance with Laws. Except as set forth on Schedule 4.5, to Seller’s knowledge, the DSD Business and the Transferred Facilities are being, and during the thirty-six (36) month period prior to the date hereof have been, conducted and operated, and the Consumable Inventory has been produced, in compliance with all Applicable Laws, except for those failures to comply which would not, individually or in the aggregate, have a Material Adverse Effect or those failures that have been cured by Seller. During the thirty-six (36) month period prior to the date hereof, neither Seller Party has received written notification from any Governmental Authority asserting that the conduct of the DSD Business, the operation of the Transferred Facilities or the production of the Consumable Inventory is not in compliance with any Applicable Law, except for those failures to comply which would not, individually or in the aggregate, have a Material Adverse Effect or any instances of noncompliance which have been cured by Seller.

4.6. Financial Statements and Condition. Seller has delivered to Buyer a copy of the unaudited pro forma statements of operations of the DSD Business for the twelve (12) month period ended June, 28, 2008, and the three (3) month period ended September 27, 2008 (collectively, the “Financial Statements”). The DSD Business is not a separately reported unit of Seller. As a result, the Financial Statements were not prepared as part of Seller’s normal reporting process. Instead, the Financial Statements have been compiled by management of the DSD Business from source documentation subject to the controls and procedures of Seller’s accounting systems. This source documentation was prepared in accordance with accounting principles set forth on Schedule 4.6-1 (the “Accounting Principles”) except that no allocation of cost has been made to reflect Seller’s corporate overhead, general and administrative expenses and services. Except as set forth on Schedule 4.6-2 or in the Financial Statements, the Financial Statements (a) have been prepared in conformity, in all material respects, with the Accounting Principles, and (b) present fairly, in all material respects, the results of operations of the DSD Business (other than the Excluded Assets and the Excluded Liabilities) for the time period specified therein. Except as set forth on Schedule 4.6-3, the definition of the term “DSD

Business” set forth in Article XI of this Agreement accurately reflects and is consistent with the business of Seller reflected in the Financial Statements for the periods covered thereby.

4.7. Consents and Approvals. Except as set forth on Schedule 4.7, no filing or registration with, no notice to and no permit, authorization, consent, approval or waiver, of any Governmental Authority is necessary to be made by any of the Seller Parties or Realty in connection with the execution, delivery or performance of this Agreement or the Additional Documents by Seller Parties or the consummation by Seller Parties of the transactions contemplated by this Agreement or the Additional Documents.

4.8. Absence of Certain Changes or Events.

(a) Except (i) with respect to matters relating to the proposed sale of the Purchased Assets and the DSD Business, (ii) for general economic conditions and conditions which affect the coffee, beverage or food service industry generally (and are not specific to the DSD Business), (iii) for any Banking Change, and (iv) as set forth in Schedule 4.8(a), since September 27, 2008, there has not been, nor does any Seller Party have knowledge of any development, individually or in the aggregate, which would reasonably be expected to cause, any material adverse change in the financial condition, business, assets, liabilities, results or operations of the DSD Business, taken as a whole, or the ability of any Seller Party to execute, deliver and perform this Agreement and the other Additional Documents to which it is a party (collectively, “Material Adverse Effect”). For the avoidance of doubt, and without limiting the foregoing, Material Adverse Effect shall not include continuation of the downward trend in sales and financial performance of the DSD Business in a manner consistent with historic trends during the past three (3) years.

(b) Without limiting the foregoing, except as set forth in Schedule 4.8(b) and except with respect to matters not inconsistent with this Agreement and the Additional Documents relating to the proposed sale of the Purchased Assets and the DSD Business (including the separation of the DSD Business from the other businesses of the Seller Parties), since September 27, 2008, (i) the Seller Parties have conducted the DSD Business in the ordinary course, and (ii) there has not been any sale or other disposition, except in the ordinary course of the DSD Business, of any assets of the DSD Business, or any Liens (other than Permitted Liens) placed on the assets of the DSD Business.

4.9. Payment of Taxes. Except as set forth on Schedule 4.9, Seller has filed all Business Returns required to be filed (or obtained an extension with respect thereto) with respect to the DSD Business, except for those failures to file or obtain an extension which would not, individually or in the aggregate, have a Material Adverse Effect. Except as set forth on Schedule 4.9, Seller has timely paid, or made adequate provision for the payment of, all Taxes shown to be due on such Business Returns, all Tax assessments related to such Business Returns received, and all Taxes related to such Business Returns which have or may become due under Applicable Law with respect to all periods or portions thereof ending on or prior to the Closing

Date, and, with respect to all periods through September 27, 2008, adequate provision therefor is reflected in the Financial Statements. Except as set forth on Schedule 4.9, Seller has not requested an extension of time within which to file any such Business Return which has not since been filed. Except as set forth on Schedule 4.9, Seller has not received written notice of any claim by any Taxing Authority in any jurisdiction where it does not file Tax returns or pay Taxes that it is or may be subject to Tax by that jurisdiction solely as a result of its ownership or operation of the DSD Business.

4.10. Owned Real Property.

(a) A copy (including copies of all documents related to the exceptions listed therein) of a preliminary report with respect to each parcel of Owned Real Property (the “Title Report”) has been previously provided to Buyer. There is no pending or, to Seller’s knowledge, threatened condemnation or other form of eminent domain proceeding against all or any portion of the Owned Real Property. None of the Owned Real Property is subject to any commitment, right of first refusal or other arrangement for the sale, transfer or lease thereof to any third party.

(b) The structures, related improvements and fixtures located on the Owned Real Property and Leased Real Property (i) to Seller’s knowledge, have no material defects, and (ii) are in a condition sufficient for the operation of the DSD Business as presently conducted, subject to maintenance, repairs and improvements to address normal wear and tear. No Seller Party is a sublessor or sublessee of any of the Owned Real Property or the Leased Real Property except as set forth in Schedule 4.10(b).

4.11. Leased Real Property. Schedule 4.11 sets forth an accurate and complete list of all Real Property Leases. Seller has provided Buyer with correct and complete copies of all Real Property Leases and all amendments thereto. Seller is in peaceable possession of the Leased Real Property. Except as set forth in Schedule 4.2 or Schedule 4.11, with respect to each of the Real Property Leases:

(a) at Closing such Real Property Lease will be valid and binding upon Realty and, to the knowledge of Seller, enforceable against the other parties thereto in accordance with its terms;

(b) none of the Seller Parties, Realty or the DSD Business is in breach of or default under such Real Property Lease and, except for breaches or defaults caused by the sale of the Purchased Assets to Buyer and Seller’s performance hereunder, no event has occurred or circumstance exists which, with the delivery of notice, the passage of time or both, would constitute such a breach or default, or permit the termination, modification or acceleration of rent under such Real Property Lease, except where such breach or default would not, individually or in the aggregate, have a Material Adverse Effect;

(c) none of the Seller Parties, Realty or the DSD Business owes, or will owe in the future, any brokerage commissions or finder’s fees with respect to such Real Property Lease;

(d) the other party to such Real Property Lease is not an Affiliate of any of the Seller Parties;

(e) none of the Seller Parties or Realty has subleased, licensed or otherwise granted any person or entity the right to use or occupy such Leased Real Property or any portion thereof;

(f) none of the Seller Parties or Realty has collaterally assigned or granted any Lien in such Real Property Lease or any interest therein; and

(g) to the knowledge of Seller, no other party to any Real Property Lease is in breach thereof or default thereunder.

4.12. Tangible Personal Property. The tangible personal property, including the Tangible P&E and the Owned Vehicles, included in the Purchased Assets is owned by Seller, free and clear of all Liens other than Permitted Liens and Liens set forth in Schedule 4.12-1, all of which Liens, except for Permitted Liens, shall be fully released prior to Closing. Schedule 4.12-2 contains an accurate and complete list of each item of Tangible P&E (other than any Owned Vehicles) located at the Transferred Facilities as of October 9, 2008, having a fair market value on Seller’s books and records of at least $25,000.00 as of such date.

4.13. Vehicles; Routes; Personal Property Leases; Prepaid Expenses; Promotional Accruals.

(a) Schedule 4.13-1 sets forth an accurate and complete list of all routes used in the DSD Business as of October 9, 2008 (collectively, the “Routes”). An accurate and complete list of the Owned Vehicles used in the DSD Business as of October 24, 2008, is attached as Schedule 4.13-2. Since September 27, 2008, other than in the ordinary course of the DSD Business, Seller has not changed routes of the DSD Business or disposed of any Vehicles. The Routes, as changed by Seller prior to the Closing Date in the ordinary course of the DSD Business in accordance with Section 6.1, shall be referred to as the “Closing Routes”.

(b) Schedule 4.13-3 is an accurate and complete list of each Personal Property Lease involving the payment by Seller of lease payments that in the aggregate exceed $25,000 per calendar year. Seller has provided Buyer with correct and complete copies of all Personal Property Leases listed on Schedule 4.13-3. Except as set forth on Schedule 4.13-4, (i) each Personal Property Lease is valid and binding upon the Seller Party who is a party thereto, and, to the knowledge of Seller, enforceable against the other parties thereto in accordance with its terms, except where the failure of such Personal Property Lease to be valid, binding or enforceable would not, individually or in the aggregate, have a Material Adverse Effect or such failures that have been cured by Seller, (ii) to the knowledge of Seller, none of the Seller Parties or the DSD Business is in breach of or default under such Personal Property Lease, and, except for breaches or defaults caused by the acquisition of the Purchased Assets by Buyer and Seller’s performance under this Agreement, no event has occurred or circumstance exists which, with the delivery of notice, the passage of time or both, would constitute such a breach or default by

Seller, or permit the termination, modification or acceleration of any obligation of Seller under such Personal Property Lease, except where such breach or default would not, individually or in the aggregate, have a Material Adverse Effect, and (iii) to the knowledge of Seller, no other party to any Personal Property Lease is in breach thereof or default thereunder, except where such breach or default would not, individually or in the aggregate, have a Material Adverse Effect.

(d) Schedule 4.13-6 contains an accurate and complete list of Promotional Accruals relating exclusively to the DSD Business as of June 28, 2008.

4.14. Litigation. Except as set forth in Schedule 4.14, there are no claims, actions, suits, governmental audits or investigations, or proceedings, including Products Liability Claims (collectively, “Claims”), pending or, to the knowledge of Seller, threatened, before any Governmental Authority, or before any arbitrator of any nature, brought by or against any Seller Party or Realty involving, affecting or relating to (a) the DSD Business, the Purchased Assets, or the transactions contemplated by this Agreement or the other Additional Documents, (b) seeking to enjoin or rescind the transactions contemplated by this Agreement or the Additional Documents or (c) otherwise preventing Seller Parties from complying with the terms and provisions of this Agreement and the Additional Documents. None of the DSD Business or the Purchased Assets is subject to any Judgment. To Seller’s knowledge, none of the Claims set forth in Schedule 4.14 are expected to have a Material Adverse Effect.

4.15. Intellectual Property. To Seller’s knowledge, no DSD Intellectual Property has been registered with any Governmental Authority other than as set forth on Schedule 4.15. For each registered DSD Business Mark, Schedule 4.15 lists the jurisdiction of registration and the applicable application, registration or serial number. Except as set forth on Schedule 4.15, the Seller Parties own all right, title and interest in and to all of the DSD Business Marks in the United States free and clear of all Liens (other than the Permitted Liens). Except as set forth on Schedule 4.15, no Seller Party receives and no Person has a right to receive any royalty or similar payment in respect of the DSD Business Marks. Except as set forth on Schedule 4.15, neither Seller Party has licensed, sublicensed or given permission to anyone to use any of the DSD Business Marks. Except as set forth on Schedule 4.15, no Seller Party is subject to any Judgment, nor have any of them entered into or become a party to any Contract, in either case which restricts or impairs the ability of any Seller Party to use, exploit, assert or enforce any of the DSD Business Marks anywhere in the United States. To the knowledge of Seller, the DSD Intellectual Property has not interfered with, infringed (directly, contributorily, by inducement or otherwise), misappropriated, or otherwise violated, and, to the knowledge of Seller, the DSD Intellectual Property does not infringe (directly, contributorily, by inducement or otherwise), misappropriate or otherwise violate any Proprietary Rights of any third party. Seller Parties have not received any written charge, complaint, claim, demand or notice alleging any such interference, infringement, misappropriation or violation (including any claim that the DSD

Business must license or refrain from using any Proprietary Rights of any third party). Except with respect to the unauthorized registered use by third parties of domain names, Seller Parties and the DSD Business have taken all reasonable and prudent steps in the United States to protect the DSD Business Marks from infringement in the United States by any other firm, corporation, association or Person and will continue to maintain and protect all of the DSD Business Marks in the United States prior to Closing so as not to adversely affect the validity or enforceability thereof. Except as set forth on Schedule 4.15, to the knowledge of Seller, no Person in the United States has or is infringing on (directly, contributorily, by inducement or otherwise), interfering with, misappropriating or violating the DSD Business Marks and no Seller Party has received any written notice of the same. No interference, opposition, reissue, reexamination or other proceeding is pending or, to the Seller Parties’ knowledge, is threatened, which challenges the scope, legality, validity, enforceability, use or ownership of any item of the DSD Business Marks in the United States. All of Seller’s rights with respect to the DSD Business Marks are valid and enforceable rights of Seller Parties and will not cease to be valid and in full force and effect in the United States by reason of the execution, delivery and performance of this Agreement and the Additional Documents or the consummation of the transactions contemplated hereby and thereby. Except as set forth on Schedule 4.15, no Seller Party has ever agreed to indemnify any Person for or against any interference, infringement or misappropriation, with respect to any DSD Intellectual Property outside the ordinary course of the DSD Business. To Seller’s knowledge, no Seller Party possesses a registration for any domain name using the DSD Business Marks listed on Schedule 1.1(a)-1 except for those domain names set forth on Schedule 4.15. For purposes of this Section 4.15, the term “DSD Intellectual Property” does not include any copyright which is not material.

4.16. Permits. To Seller’s knowledge, Seller or Realty possess the Permits set forth on Schedule 4.16-1. To the knowledge of Seller, the Permits set forth on Schedule 4.16-1 include all of the Permits necessary for Seller and Realty to own and operate the DSD Business as conducted by them as of the Closing Date, except for those Permits the failure of which to possess would not, individually or in the aggregate, have a Material Adverse Effect. The DSD Business and the Transferred Facilities are operated in compliance with, all Permits, except for those failures to comply which would not, individually or in the aggregate, have a Material Adverse Effect. All of the Permits listed on Schedule 4.16-1 are in full force and effect, and no Seller Party has received during the past three (3) years any written notice to the contrary except as set forth on Schedule 4.16-2.

4.17. Contracts.

(a) Set forth in Schedule 4.17(a) is an accurate and complete list of all Material Contracts other than those specifically identified in another Schedule to this Agreement. The Seller Parties have delivered or made available to Buyer a correct and complete copy of each Material Contract and all amendments thereto. The term “Material Contract” means each of the following Contracts relating to the DSD Business which are either Purchased Contracts or Mixed Use Contracts (other than Contracts for the purchase by Seller of green coffee, tea, Liquid Coffee

concentrate, cocoa and cappuccino products, Machines and Spare Parts, and Contracts relating to software and information technology services or products) to which a Seller Party or Realty is a party or is bound:

(i) Any Contract (or group of related Contracts) for the purchase or sale of commodities, supplies, products or other personal property, or for the furnishing or receipt of services, the performance of which will extend over a period of more than one year or that involves expenditures or receipts of the DSD Business in excess of $87,500 annually and which cannot be terminated on sixty (60) or less days notice without penalty;

(ii) Any Contract not made in the ordinary course of the DSD Business;

(iii) Any distribution, franchise, license, sales or commission Contract related to the DSD Business;

(iv) Any Contract that contains covenants that in any way purport to restrict the business activity of the DSD Business (or any part thereof) or limit the freedom of the DSD Business (or any part thereof) to engage in any line of business or to compete with any Person;

(v) Any Contract (or group of related Contracts) involving annual revenues of more than $87,500 under which Seller has granted price protection provisions;

(vi) Any Contract with an indemnity obligation not made in the ordinary course of the DSD Business;

(vii) Any purchase, supply or other Contract imposing on Seller confidentiality covenants not made in the ordinary course of the DSD Business;

(viii) Any purchase, supply or other Contract, other than service Contracts, imposing on Seller nonsolicitation covenants;

(ix) Any purchase, supply or other Contract (or group of related Contracts) which provides for warranties or return of product, rebates, sharing of fees, grant of discounts or similar arrangements involving annual sales by Seller in excess of $87,500 or which provides a grant of exclusivity by Seller to another contracting party;

(x) Any Contract (or group of related Contracts) which provides for consignment or similar arrangement of tangible assets having a fair market value in excess of $87,500;

(xi) Any collective bargaining agreement relating to the DSD Business;

(xii) Any Contract for the employment of any individual on a full-time, part-time or other basis or providing severance benefits or any consulting agreement providing annual compensation in excess of $87,500;

(xiii) Any Contract under which it has advanced or loaned any amount to any of the employees of the DSD Business outside the ordinary course of the DSD Business;

(xiv) Any Contract which is a “futures” contract committing the DSD Business (or any part thereof) to purchase, or accept delivery of, product at future times at fixed prices;

(xv) Any Contract that is a joint venture agreement;

(xvi) Any Contract (or group of related Contracts) that involves receivables of the DSD Business in excess of $87,500 annually which contains a “most favored customer” or “most favored nation” clause in favor of any customer of the DSD Business; and

(xvii) Any Contract that is an amendment, supplement or modification (whether oral or written) in respect of any of the foregoing.

(b) Except as set forth on Schedule 4.17(b), with respect to each of the DSD Contracts, (i) such DSD Contract is valid and binding upon the Seller Party who is a party thereto or Realty, as the case may be, and, to the knowledge of Seller, enforceable against the other parties thereto in accordance with its terms, except to the extent that any failure of such DSD Contract to be valid, binding or enforceable would not, individually or in the aggregate, have a Material Adverse Effect, (ii) none of the Seller Parties or Realty is in breach of or default under such DSD Contract and, except for breaches or defaults caused by the sale of the Purchased Assets to Buyer and Seller’s performance hereunder, no event has occurred or circumstance exists which, with the delivery of notice, the passage of time or both, would constitute a breach or default, or permit the termination, modification or acceleration of any obligation under such DSD Contract, except where such breach or default would not, individually or in the aggregate, have a Material Adverse Effect, and (iii) to the knowledge of Seller, no other party to any DSD Contract is in breach thereof or default thereunder, except to the extent that any such breach would not, individually or in the aggregate, have a Material Adverse Effect.

4.18. No Other Agreement. Other than for sales of assets in the ordinary course of the DSD Business, none of the Seller Parties or Realty, or any of their respective Affiliates or Representatives, has any commitment or legal obligation, absolute or contingent, to any other Person other than Buyer, to sell, assign, transfer or effect a sale or other disposition of any of the Purchased Assets or the DSD Business.

4.19. Employee Plans.

(a) Schedule 4.19(a) lists each material plan, agreement, arrangement or policy providing for compensation, bonuses, profit-sharing, stock option or other stock related rights or other forms of incentive or deferred compensation, vacation benefits, insurance (including any self-insured arrangements), health or medical benefits, employee assistance program, disability or sick leave benefits, workers’ compensation, supplemental unemployment benefits, change in control benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits), or other employee benefits, in each case, which is either maintained, administered, sponsored or contributed to by a Seller Party or their ERISA Affiliates for the benefit of any Hired Personnel (each, individually, an “Employee Plan” and collectively, the “Employee Plans”).

(b) With respect to each of the Employee Plans that is not a Multiemployer Plan, Seller has made available to Buyer: (i) a true, correct and complete copy of such Employee Plan, (ii) the most recent Annual Report (Form 5500 Series) and accompanying schedule, if any, and (iii) the most recent determination letter from the IRS, if any. Seller has also made available to Buyer the current summary plan description and any material modifications thereto for each Employee Plan that is not a Multiemployer Plan in respect of which there exists a summary plan description.

(c) Schedule 4.19(c) identifies each Employee Plan intended to be a “qualified plan” within the meaning of Section 401(a) of the Code (“Qualified Plans”). Each Qualified Plan has received a favorable determination letter from the IRS or is a prototype plan that has received a favorable opinion letter from the IRS, and any such IRS letter has not been revoked.

(d) Except as would not reasonably be expected to have a Material Adverse Effect, Seller has timely made or accrued all contributions required with respect to any Qualified Plan.

(e) Except as would not be reasonably expected to have a Material Adverse Effect, the Seller Parties and their ERISA Affiliates have performed and complied with all of their obligations under or with respect to the Employee Plans and each Employee Plan that is not a Multiemployer Plan has been operated in all material respects in accordance with its terms and in compliance with all Applicable Laws including the Code and ERISA, and to Seller’s knowledge, each Multiemployer Plan has been operated in all material respects in accordance with its terms and in compliance with all Applicable Laws including the Code and ERISA. There are no pending or, to Seller’s knowledge, threatened claims or proceedings relating to the Employee Plans that are not Multiemployer Plans, other than routine claims for benefits that have not resulted in any pending or, to Seller’s knowledge, threatened litigation. Neither the Seller Parties nor their ERISA Affiliates have engaged in a transaction with respect to any Employee Plan that, assuming the taxable period of such transaction expired as of the date hereof, would be reasonably expected to subject Seller to a tax or penalty imposed by Sections 4975 through 4980 of the Code or Sections 502(i) or 502(l) of ERISA in an amount which would have a Material Adverse Effect. There are no material audits, inquiries or proceedings pending or, to Seller’s

knowledge, threatened by the IRS, Department of Labor, or any other Governmental Authority with respect to any Employee Plan.

4.20. Labor and Employee Matters.

(a) Except as set forth in Schedule 4.20(a), Seller is not a party to, or otherwise bound by, a collective bargaining agreement (or any other agreement with any labor organization), which covers any of the Hired Personnel. To Seller’s knowledge, no labor unions or other organizations have filed a petition within the last 6 months with the National Labor Relations Board or any other Governmental Authority seeking certification as the collective bargaining representative of any employees of the DSD Business. To Seller’s knowledge, no labor union or organization is currently engaged in any organizing activity with respect to any employees of the DSD Business. During the past two (2) years, the DSD Business has not experienced any material work stoppage, labor dispute, grievance, slowdown, lockout or strike, and to the knowledge of Seller, none has been threatened against the DSD Business. To Seller’s knowledge, except as set forth in Schedule 4.20(a), there is no unfair labor practice charge or complaint against the DSD Business pending before the National Labor Relations Board or any other Governmental Authority.

(b) Schedule 4.20(b) lists all DSD Employees as of October 27, 2008, and for each such employee the: (i) job position; (ii) job location; (iii) classification as full-time or part-time as of November 13, 2008; (iv) classification as exempt or non-exempt under applicable state or federal overtime regulations; (v) current hourly rate of compensation or base salary (as applicable); (vi) eligible vacation; and (vii) the original date of hire. The last pay review day for DSD employees not covered by a Labor Contract is September 1, 2008. For DSD Employees covered by a Labor Contract, the applicable Labor Contract includes the effective date of any pay rate changes. Schedule 4.20(b) describes Seller’s policies for scheduling hours of work per week for DSD Employees who are non-exempt and part-time employees. Schedule 4.19(a) lists the Employee Plans that provide to DSD Employees other compensation or allowance and target incentive compensation (commission and/or bonus, as applicable). In addition, to the extent any DSD Employees are on leaves of absence as of October 27, 2008, Schedule 4.20(b) indicates the category of such leave of absence and an estimate of each such employee’s anticipated date of return to active employment. To Seller’s knowledge, no executive, key employee or group of DSD Employees listed on Schedule 4.20(b) has indicated any plans to terminate employment with the Seller before or with Buyer promptly after the Closing. Schedule 4.20(b) shall be updated and provided to Buyer as of the Closing Date and the information provided by Seller to Buyer as described in Section 3.2(h)(i) above shall be accurate as of the Closing Date with respect to the DSD Employees as of such date.

(c) During the 90 days prior to the Closing, Seller has not effectuated (i) a “plant closing” (as defined in the Worker Adjustment and Retraining Notification Act (the “WARN Act”) (or any similar state or local law)) affecting any Transferred Facility or (ii) a “mass layoff”

(as defined in the WARN Act (or any similar state or local law)) affecting any Transferred Facility.

(d) Seller has provided Buyer with access to copies of all manuals, written policies or similar documents of the Seller Parties which are material to the DSD Business regarding compensation, benefits, perquisites, and personnel matters. Except for the Sara Lee Corporation Severance Pay Plan and the Sara Lee Corporation Severance Pay Plan for A & B Level Executives or as provided under any Labor Contract in which Hired Personnel participate (the “Severance Plans”), the DSD Business has no oral or written severance policy or other severance obligation.

4.21. Hazardous Substances. Except as set forth in Schedule 4.21:

(a) To Seller’s knowledge, the DSD Business is, and during the past five (5) years has been, in compliance and the Transferred Facilities are, and during the past five (5) years have been, operated and maintained by Seller in compliance with all Environmental Laws including laws relating to Hazardous Substances, except where non-compliance would not, individually or in the aggregate, have a Material Adverse Effect. Seller has, and during the past five (5) years has had, all Permits required under any Environmental Law and the DSD Business and the Facilities are, and at all times have been in compliance with such Permits, except where non-compliance would not, individually or in the aggregate, have a Material Adverse Effect. During the five (5) years preceding the Closing, Seller has not received any written notice that the DSD Business or the Transferred Facilities is or were claimed to be in violation of the provisions of any Environmental Law or in non-compliance with the conditions of any Permit, and there are no Claims pending or, to the knowledge of Seller, threatened to that effect. To Seller’s knowledge, during the past five (5) years there have been no Hazardous Substance Releases at the Transferred Facilities which were reportable under Applicable Laws.

(b) Seller has delivered true, complete and correct copies of (i) all written reports of all environmental investigations, assessments, studies, audits, and test results, which have been conducted at any Transferred Facility within the past five (5) years by any outside attorney, environmental consultant or engineer engaged by Seller for such purpose, and (ii) to the knowledge of Seller, all Permits, reports, and filings required by any applicable Environmental Laws, OSHA safety complaints or other similar documentation required by law to be filed with any Governmental Authority during the past five (5) years relating to the ownership or operation of the Transferred Facilities in the possession of Seller. All such documents referenced in the foregoing clauses (i) and (ii) are listed on Schedule 4.21(b).

(c) There are no underground storage tanks currently used or operated on, in or under any of the Transferred Facilities, and, to Seller’s knowledge, no underground storage tanks currently exist on, in or under any of the Transferred Facilities.

(d) To the Seller’s knowledge, there are no asbestos, asbestos containing materials or any PCB containing equipment or fixtures which would require remediation, decommissioning, decontamination, abatement or removal for continued operations at the Transferred Facilities.

(e) There are no Judgments by any Governmental Authority or quasi-governmental entity relating to any Environmental Law which regulate, obligate, bind or in any way affect the DSD Business or the Transferred Facilities.

(f) To Seller’s knowledge, there is not and has not been during the past five years any Hazardous Substance used, generated, treated, stored, transported, disposed of, handled or otherwise existing on, under or about any Transferred Facility, except for quantities of any such Hazardous Substances stored or otherwise held on, under or about any such Transferred Facility in compliance with all Environmental Laws.

(g) To Seller’s knowledge, Seller has at all times used, generated, treated, stored, transported, disposed of or otherwise handled its Hazardous Substances in substantial compliance with all Environmental Laws and in a manner that will not result in liability of Seller or Buyer under any Environmental Law.

(h) To Seller’s knowledge, there are no present or past Environmental Conditions (as defined below) in any way related to the DSD Business or the Transferred Facilities which would have a Material Adverse Effect. “Environmental Conditions” means the introduction into the soil, groundwater or environment of the Transferred Facilities (through leak, spill, release, discharge, escape, emission, dumping, disposal or otherwise) of any pollution, including without limitation any contaminant, irritant or pollutant or Hazardous Substance (upon the property of the DSD Business and only where such pollution constituted at the time thereof a violation of any Environmental Law).

4.22. Brokers’ Fees and Commissions. None of the Seller Parties or any of their respective Affiliates or Representatives has engaged any investment banker, broker or finder in connection with the transactions contemplated hereby.

4.23. Consumable Inventory. The Consumable Inventory shall not at the time of Closing (a) be adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as amended, and including its food and coloring additive amendments and the regulations promulgated thereunder (collectively the “Federal Act”), (b) be adulterated or misbranded within the meaning of any Applicable Law, or (c) be an article which, under the provisions of Sections 405 and 505 of the Federal Act, would not be able to be introduced into interstate commerce in the United States. Except as provided on Schedule 4.23, all Consumable Inventory produced in any Facility operated by Seller was produced in accordance with Good Manufacturing Practice (as that term is defined in the Federal Act).

4.24. Certain Payments. Since September 27, 2008, neither the Seller Parties nor any Affiliate of the Seller Parties, any Representative of the Seller Parties or such Affiliate nor any

other Person associated with or acting for or on behalf of the Seller Parties has in connection with the DSD Business, directly or indirectly, made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment to any Person, private or public, regardless of form, whether in money, property, or services (a) to obtain favorable treatment in securing business, (b) to pay for favorable treatment for business secured, (c) to obtain special concessions or for special concessions already obtained, for or in respect of any Seller Party, or (d) in violation of any Applicable Law.

4.25. Customers. Seller has provided to Buyer an accurate and complete list prepared by the management of the DSD Business identifying those customers who, during the period from July 1, 2007 to June 28, 2008, either ceased to do business with the DSD Business and transferred their sales of coffee, tea and related products to Seller’s NSO Business, or ceased to do business with the NSO Business and transferred their sales of coffee, tea and related products to Seller’s DSD Business (collectively “Prior Customers”). During the period from June 29, 2008, to the Closing Date, the net loss of gross margin to the DSD Business due to the transfer of business by Prior Customers from the NSO Business to the DSD Business and from the DSD Business to the NSO Business shall not exceed the amount determined by prorating $2.5 million based on the number of days from and including June 29, 2008 through and including the Closing Date divided by 365 days. The fluctuations in purchases by Shared Customers from the DSD Business and the NSO Business are not covered by the representations and warranties made in this Section 4.25.

4.26. LOI Compliance. On November 24th, 25th, and 26th, 2008, Seller asked each of the individuals listed on Schedule 4.26 whether, since August 20, 2008, such individuals took any action intended to induce conversion of (a) exclusive DSD Customers to Shared Customers or customers of the NSO Business, or (b) Shared Customers to customers solely of Seller’s NSO Business. The form of inquiry made and the results of such inquiries are noted on Schedule 4.26.

ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to the Seller Parties as of the date hereof and as of the Closing Date as set forth below.

5.1. Corporate Organization. Buyer is a corporation, duly organized, validly existing and in good standing under the laws of the state of Delaware.

5.2. Authority. Buyer has the corporate power and authority to enter into this Agreement and the other Additional Documents to which it is a party and to consummate the transactions contemplated hereby and thereby, and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement, the other Additional Documents to which it is a party, the consummation of the transactions contemplated hereby and thereby and the performance of Buyer’s obligations hereunder and thereunder have been duly authorized by Buyer, and no other proceedings on the part of Buyer are necessary to authorize such execution,

delivery and performance. This Agreement and the other Additional Documents to which Buyer is a party have been or will be duly and validly executed and delivered by Buyer and assuming the due execution and delivery of this Agreement and the Additional Documents by the other parties thereto, constitutes or will constitute valid and binding legal obligations of Buyer to the extent a party, enforceable against Buyer to the extent a party thereto in accordance with their respective terms, except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights in general and subject to general principles of equity and the discretion of courts in granting equitable remedies.

5.3. No Violation. The execution, delivery and performance by Buyer of this Agreement and the other Additional Documents to which it is a party and the consummation by Buyer of the transactions contemplated hereby and thereby, do not violate any Applicable Law, do not and will not conflict with or result in any violation of, or constitute a breach of or default under (whether with or without notice or a lapse of time or both) any provision of the charter document or bylaws of Buyer or of any other agreement or obligation to which it is a party, the breach of which would impair Buyer’s ability to consummate such transactions.

5.4. Consents and Approvals. No filing or registration with, no notice to and no permit, authorization, consent, approval or waiver of any Governmental Authority or other Person is necessary to be made by Buyer for the execution, delivery or performance of this Agreement or the Additional Documents by Buyer or the consummation by Buyer of the transactions contemplated hereby or thereby.

5.5. Brokers’ Fees and Commissions. None of Buyer or its Representatives has engaged any investment banker, broker or finder in connection with the transactions contemplated hereby other than Kerlin Capital Group, LLC, whose fees will be paid by Buyer.

5.6. Litigation. There are no Claims pending or, to the knowledge of Buyer, threatened before any Governmental Authority, or before any arbitrator of any nature, against Buyer which seek to enjoin or rescind the transactions contemplated by this Agreement and the Additional Documents or otherwise prevent Buyer from complying with the terms and provisions of this Agreement and the Additional Documents.

5.7. Investigation By Buyer. Buyer acknowledges that (a) Buyer has made such investigation of the business, assets, financial condition and liabilities of the DSD Business, and has been offered the opportunity to ask such questions of appropriate representatives of Seller relating to the foregoing, as Buyer deems appropriate to enter into the transactions contemplated hereby, and (b) except for the representations and warranties of the Seller Parties in this Agreement, Buyer is not relying on any representation or warranty by the Seller Parties or any other Person in entering into the transactions contemplated hereby (and will not rely on any other representation or warranty in effecting the Closing). Buyer acknowledges that neither any Seller

Party nor any other Person has made any representation or warranty as to the future prospects (financial or otherwise), profitability, sales levels or independent operation of the DSD Business.

5.8. Availability of Financing. Except for the amount of the Closing Payment that Buyer may pay pursuant to the Note as set forth in Section 2.1(b), Buyer currently has, and as of Closing will have, all funds necessary to perform its obligations hereunder, including to pay the Purchase Price at the Closing.

ARTICLE VI.
COVENANTS

6.1. Conduct of DSD Business Prior to the Closing. During the period from the date of this Agreement until the Closing, except as expressly contemplated or permitted by this Agreement or arising in the ordinary course of the DSD Business, or to the extent that Buyer shall otherwise consent, the Seller Parties shall use commercially reasonable efforts to preserve the Purchased Assets and DSD Business intact, including its present operations, Transferred Facilities, working conditions and relationships with lessors, licensors, suppliers, customers and employees, and carry on the DSD Business in such a manner so that the representations and warranties contained in Article IV shall continue to be true and correct in all material respects on and as of the Closing Date as if made on the Closing Date. Without limiting the foregoing, except as expressly contemplated or permitted by this Agreement or to the extent that Buyer shall otherwise consent, Seller Parties shall operate the DSD Business in the ordinary course, and Seller Parties shall not take any action in breach of this Agreement. Without limiting the generality of the foregoing, Seller Parties shall not, except as specifically contemplated by this Agreement:

(a) enter into any agreements, adopt promotions or otherwise conduct the DSD Business in any way which would reasonably be likely to materially and adversely affect the sales or results of operations of the DSD Business, including taking any action intended to influence or induce the conversion of (i) Exclusive Customers to Shared Customers or customers solely of Seller’s NSO Business, or (ii) Shared Customers to customers solely of Seller’s NSO Business, or to otherwise reduce the purchases of DSD Customers from the DSD Business. It is understood and agreed that certain customers transfer their transactions and certain other customers fluctuate their levels of purchases of coffee, tea and other products from the DSD Business to the NSO Business and from the NSO Business to the DSD Business in the ordinary course of the DSD Business without any conduct on the part of Seller intended to induce or influence customers, and that transfers of customers and transactions at the levels as described in Section 4.25 are consistent with the ordinary course of the DSD Business;

(b) enter into, extend, materially modify, terminate or renew any Material Contract or Real Property Lease, except in the ordinary course of the DSD Business;

(c) sell, assign, transfer, convey, lease, mortgage, pledge or otherwise dispose of or encumber any of the Purchased Assets, or any interests therein, except in the ordinary course of the DSD Business;

(d) fail to pay, when due, accounts payable, debts and other Liabilities of the DSD Business, except in the ordinary course of the DSD Business and in the case of bona fide disputes regarding the same;

(e) remove any Tangible P&E from the Transferred Facilities, except for removals or dispositions of damaged or obsolete Tangible P&E, or sales or other dispositions in the ordinary course of the DSD Business; provided that Seller shall be permitted to remove the Brew Equipment Inventory from the Transferred Facilities that are not part of the Purchased Assets as a result of the allocation process of Section 1.1(c); or

(f) reconfigure Routes except in the ordinary course of the DSD Business.

6.2. Employees and Employee Benefits.

(a) Subject to the Labor Contracts, at the Closing Buyer shall offer employment on an at-will basis, effective as of the Closing Date, to all DSD Employees who are employed by the Seller (or one of its Affiliates) immediately prior to the Closing (the individuals who either accept Buyer’s offer of employment or are subject to the Labor Contracts are collectively referred to herein as the “Hired Personnel”), in each case (A) at an Approved Location (and Buyer agrees not to move Hired Personnel to a different location for a period of ninety (90) days after the Closing Date) in a substantially similar capacity in which they were employed by Seller immediately prior to the Closing Date, (B) at the same or a substantially similar cash salary and cash bonus level paid or payable to such Hired Personnel as was paid or payable immediately prior to the Closing Date, (C) providing each such Person who is a Hired Personnel not covered by a Labor Contract and their eligible dependents, comparable employee benefits as are currently available to similarly situated employees of Buyer or each such Person who is a Hired Personnel covered by a Labor Contract and their eligible dependents such benefits and other terms and conditions required by any Labor Contracts, (D) consistent with the terms of Buyer’s benefit plans, Buyer will provide each such Hired Personnel full service credit (equal at least to the level existing immediately prior to the Closing Date) for vesting, eligibility and severance purposes (but not for purposes of benefit accruals under any defined benefit plans of Buyer) under any employee benefit or severance plan in force as of the Closing for employees of Buyer (“Buyer Employee Plans”) and Buyer shall amend (including by board resolution) the terms of the Buyer’s Employee Plans to reflect this service credit, (E) providing that with respect to any medical, dental or other welfare benefits that are provided at any time under Buyer Employee Plans, any applicable pre-existing condition exclusions (to the extent satisfied under the comparable Employee Plan immediately prior to the Closing Date) be waived, and any expenses incurred before such time under the comparable Employee Plan be taken into account under such Buyer Employee Plan for purposes of satisfying applicable deductible, coinsurance and

maximum out-of-pocket provisions, and (F) providing paid vacation in an amount equivalent to each such Hired Personnel’s accrued and unused vacation with Seller at Closing except that, with respect to the Hired Personnel whose vacation pay becomes payable under Applicable Law by Seller as a consequence of the Acquisition, Buyer will pay to Seller, in addition to the Purchase Price, the amount of vacation pay paid by Seller to such Persons (the “Vacation Reimbursement”), provided that the total amount of the Vacation Reimbursement and accrued and unused vacation liability assumed by Buyer under this Agreement shall not exceed $300,000.00. Buyer shall provide to each Hired Personnel who receives vacation pay from Seller under clause (F) of the prior sentence unpaid vacation time in an amount equivalent to such Hired Personnel’s accrued vacation with Seller as of the Closing.

(b) Buyer agrees that it shall enter into a participation or similar arrangement with each Assumed Multiemployer Plan and union to the extent each such Assumed Multiemployer Plan requires such an arrangement in order for the Buyer to make the contributions necessary to comply with the requirements of ERISA Section 4204.

(c) As of the Closing Date, Buyer and its ERISA Affiliates shall be responsible for any legally mandated continuation of health care coverage under federal or state law for all qualified beneficiaries associated with any Hired Personnel (including their dependents) who have or have had a loss of health care coverage due to a qualifying event (as defined in Section 4980B of the Code and Part 6 of Title 1 of ERISA (“COBRA”), or under any Applicable Law) that occurs on or after the Closing Date.

(d) The Buyer shall be solely responsible for as of the Closing Date all contribution obligations (including any charges, increases or adjustments required under Applicable Law or otherwise, or pursuant to any funding plan in relation thereto) due after the Closing Date with respect to the coverage of employees of the DSD Business under the Multiemployer Plans of the Seller and its ERISA Affiliates (individually, an “Assumed Multiemployer Plan” and collectively, the “Assumed Multiemployer Plans”). In addition, the following provisions shall apply with respect to any Assumed Multiemployer Plan subject to Title IV of ERISA, so that the sale of the Purchased Assets shall be covered under Section 4204 of ERISA and shall not be deemed a complete or partial withdrawal under Title IV of ERISA.

(i) The Buyer shall make contributions (including any charges, increases or adjustments to contributions required under Applicable Law or otherwise, or pursuant to any funding plan in relation thereto) to such Assumed Multiemployer Plans with respect to the DSD Business for substantially the same number of contribution base units for which the Seller and its ERISA Affiliates have an obligation to contribute with respect to the DSD Business immediately prior to the Closing Date.

(ii) Buyer and the Seller Parties shall inform each such Assumed Multiemployer Plan in writing of their intention that the sale of assets hereunder be covered by Section 4204 of ERISA, and use their best efforts to demonstrate to the

satisfaction of each such Assumed Multiemployer Plan that no Buyer’s bond or escrow is required under Section 4204 of ERISA and the regulations promulgated thereunder. In making such demonstration, neither Buyer nor the Seller, however, shall be required to disclose non-public information to the Assumed Multiemployer Plans. If after reasonable efforts Buyer and the Seller are unable to so demonstrate to the satisfaction of such Assumed Multiemployer Plan, for a period of five plan years commencing with the first plan year beginning after the Closing Date, the Buyer, at its expense, shall provide to such Assumed Multiemployer Plan a bond issued by a corporate surety company that is an acceptable surety for purposes of ERISA Section 412, or an amount held in escrow by a bank or similar financial institution satisfactory to such Assumed Multiemployer Plan, in an amount equal to the greater of:

(A) the average annual contribution required to be made by the Seller and its ERISA Affiliates with respect to the operations of the DSD Business under such Assumed Multiemployer Plan for the three plan years preceding the plan year in which the Closing Date occurs, or

(B) the annual contribution that the Seller and its ERISA Affiliates were required to make with respect to the operations of the DSD Business under such Assumed Multiemployer Plan for the last plan year before the plan year in which the Closing Date occurs.

The bond or escrow shall be paid to such Assumed Multiemployer Plan if the Buyer withdraws from such plan, or fails to make a contribution to such plan when due, at any time during the first five plan years beginning after the Closing Date.

(iii) If, during the first five (5) plan years beginning after the Closing Date, the Buyer withdraws in a complete withdrawal, or in partial withdrawal with respect to the operations of the DSD Business covered by any such Assumed Multiemployer Plan, the Seller and its ERISA Affiliates (determined following the Closing) shall be secondarily liable for any withdrawal liability they would have had to such Assumed Multiemployer Plan with respect to such operations (but for ERISA Section 4204) if the Liability of the Buyer with respect to such Assumed Multiemployer Plan is not paid; provided, however, that this subsection (iii) shall be of no force and effect if Buyer and/or the Seller demonstrate to the satisfaction of such Assumed Multiemployer Plan that no Buyer’s bond or escrow is required under Section 4204 of ERISA. In lieu of incurring such secondary Liability the Seller shall have the right in its discretion to pay any such withdrawal liability of Buyer or its ERISA Affiliates in the event it deems it in its best interests to do so. Buyer shall indemnify Seller for any Liability incurred by Seller on account of any withdrawal liability or any secondary Liability of Buyer arising from or in connection with Buyer’s complete or partial withdrawal from an Assumed Multiemployer Plan.

6.3. Access to Information.

(a) Between the date of this Agreement and the Closing Date, upon reasonable notice and at reasonable times, Seller will give Buyer and its Representatives access to personnel, facilities and books and records of the Seller Parties to the extent relating to the DSD Business and will permit Buyer to make copies thereof and will cooperate with regard to such inspections as it may reasonably request and will furnish Buyer such financial and operating data and other information to the extent relating to the DSD Business, the Purchased Assets and Assumed Liabilities which Buyer may from time to time reasonably request. All access hereunder shall be afforded during normal business hours, and Buyer and its Representatives shall conduct any review and inspection in such a manner so that the DSD Business’s normal business activities shall not be unduly or unnecessarily disrupted. The foregoing notwithstanding, without first obtaining the prior approval of Seller, neither Buyer nor any of its Representatives shall tour or visit the DSD Business Facilities or contact any of its employees, customers or suppliers, it being understood that any customer contacts by Buyer or any of its Representatives shall, if approved by Seller, include a Representative of Seller. Buyer acknowledges and agrees that Buyer and its Representatives shall not be afforded access to any employee records or other records or information the disclosure of which would be prohibited by any Applicable Law. Buyer shall conduct all such inspections, testing and other information gathering described in this Section 6.3(a): (i) at Buyer’s sole cost and expense, and (ii) with a standard of care that would be utilized by a reasonable and prudent person and that Buyer utilizes in the ordinary course of business. Buyer shall not conduct any environmental testing at the Transferred Facilities following execution of this Agreement.

(b) Any and all information gathered by Buyer as a result of, or in connection with, the information gathering described in Section 6.3(a) or conducted prior to the execution of this Agreement shall be kept strictly confidential and shall not be revealed to, or discussed with, any person other than the Representatives of Buyer who agree to comply with the Confidentiality Agreement and the provisions of this Section 6.3(b), except that as of the Closing Date, Buyer and its Representatives shall cease to have any such confidentiality obligation. In the event the Closing is not consummated, such information shall be returned to the Seller or destroyed in accordance with this Agreement and the Confidentiality Agreement.

6.4. Historical Financial Statements.

(a) Prior to the Closing, Seller shall cause the preparation of and deliver to Buyer the financial statements identified on Exhibit P (the “Historical Financial Statements”).

(b) Subject to subparagraph (c) below, Buyer shall reimburse Seller for fifty percent (50%) of the out-of-pocket costs incurred by Seller in preparing the Historical Financial Statements, including the out-of-pocket costs incurred in preparing a valuation report reflecting the value of the Brew Equipment Inventory at DSD Customer locations as of the Closing Date (the “Accounting Costs”), regardless of whether the Acquisition is consummated; provided,

however, (i) if the failure to consummate the Acquisition is due to the breach of any of the provisions of this Agreement by any Seller Party, but only to the extent that the act(s) or omission(s) resulting in such breach were in the control of such Seller Party, Buyer shall not have any obligation to reimburse Seller for any portion of the Accounting Costs, and (ii) if the failure to consummate the Acquisition is due to the breach of any of the provisions of the Purchase Agreement by Buyer, but only to the extent that the act(s) or omission(s) resulting in such breach were in the control of Buyer, Buyer shall reimburse Seller for one hundred percent (100%) of the Accounting Costs. Buyer shall reimburse Seller for Buyer’s portion of the Accounting Costs due under this Section 6.4(b) on the date that is the earlier of (y) the Closing, or (z) the date that is five (5) days following the termination of this Agreement under Article IX. In the event that Seller pays or incurs any Accounting Costs after the date that is the earlier of (y) or (z) of the previous sentence, Buyer shall reimburse Seller for its portion of such Accounting Costs due to Seller under this Section 6.4(b) within five (5) days of Buyer’s receipt of any invoice for such Accounting Costs, it being understood and agreed, however, that following the date that is the earlier of (y) or (z) Seller shall not incur any additional Accounting Costs other than pursuant to paragraph (e) below.

(c) The parties shall cooperate with one another and cause their respective accounting firms to cooperate with one another toward the objective of reducing the Accounting Costs, including Buyer’s submission to the SEC, as soon as reasonably practicable a waiver request seeking authorization to use abbreviated financial statements (which are more closely aligned with the transaction set forth herein). Buyer shall be entitled to a credit for fifty percent (50%) of the expenses incurred by Buyer arising from the preparation of the waiver request (“Waiver Request Costs”), including attorneys’ fees and the costs of its appraiser, against Buyer’s share of the Accounting Costs; provided, however, if Buyer is not obligated to reimburse Seller for any portion of the Accounting Costs because of a failure to consummate the Acquisition described in Section 6.4(b), then Seller shall reimburse Buyer for one hundred percent (100%) of the Waiver Request Costs within five (5) days of Seller’s receipt of an invoice for such Waiver Request Costs; provided further, if the Acquisition is not consummated due to a breach by Buyer of any of the provisions of this Agreement, but only to the extent that the act(s) or omission(s) resulting in such breach were in the control of the Buyer, then Buyer shall receive no credit against the Accounting Costs under this Section 6.4(c) with respect to the Waiver Request Costs.

(d) If before Closing the SEC requires historical financial statements of the DSD Business other than those set forth in Exhibit P, Seller shall use commercially reasonable efforts to cause the preparation of such statements, provided that the out of pocket costs incurred to prepare any such additional statements shall be shared equally between Seller and Buyer provided further, however, (i) if the failure to consummate the Acquisition is due to the breach of any of the provisions of this Agreement by any Seller Party, but only to the extent that the act(s) or omission(s) resulting in such breach were in the control of such Seller Party, Buyer shall not have any obligation to reimburse Seller for any portion of such out of pocket costs, and (ii) if the failure to consummate the Acquisition is due to the breach of any of the provisions of this Agreement by Buyer, but only to the extent that the act(s) or omission(s) resulting in such breach

were in the control of Buyer, Buyer shall reimburse Seller for one hundred percent (100%) of such out of pocket costs.

(e) If after Closing the SEC requires historical financial statements of the DSD Business other than those provided pursuant to this Section 6.4 before Closing, Seller shall use commercially reasonable efforts to cause the preparation of such statements, provided that the out of pocket costs incurred to prepare any such additional statements shall be shared equally between Seller and Buyer.

6.5. Public Announcements. None of the parties to this Agreement shall issue or make, before or after Closing, any press release or other public statements or otherwise announce the transactions described herein to employees, customers or suppliers except and unless such release, statement or announcement has been approved by both Seller and Buyer (which approval shall not be unreasonably withheld or delayed), except as may be required by Applicable Law including applicable stock exchange or NASDAQ regulations, provided in such cases the parties shall cooperate in making such announcement, including giving the other party a good faith opportunity to review and comment on such announcement.

6.6. Supplements to Schedules.

(a) From the date hereof to the Closing Date, Seller may supplement or amend the Schedules delivered in connection herewith with respect to any matter which, if existing, occurring or known at the date of this Agreement, would have been required to be set forth or described in any such Schedule or which is necessary to correct any information in any such Schedule which has been rendered inaccurate thereby, whether or not such matter is material (“Changes”). No such Changes will be considered or taken into account for the purpose of determining satisfaction of the conditions set forth in Section 7.1(a) hereof or the compliance by the Seller Parties with the covenant set forth in Section 6.1 hereof; provided, however, that by consummating the transactions contemplated hereby, Buyer waives any right or claim it may have or have had on account of or relating to such failure to satisfy conditions or comply with covenants or on account of or relating to any such breach of representation or warranty of any Seller Party. Notwithstanding the previous sentence, if a Change constitutes a Permitted Stipulated Update, then the Permitted Stipulated Update shall be considered for purposes of determining satisfaction of the conditions set forth in Section 7.1(a) hereof or the compliance by any Seller Party with the covenant set forth in Section 6.1 and Buyer shall be required to consummate the transactions contemplated hereby subject to satisfaction of the other conditions set forth in Section 7.1. The term “Permitted Stipulated Update” means Changes relating to matters occurring after the execution of this Agreement (and which did not exist on the date hereof), which do not have a Material Adverse Effect, and which do not arise from a breach of any covenant in this Agreement, and which (A) relate to matters arising in the ordinary course of business which give rise to neither a casualty nor a third party claim against either Seller Party, (B) reflect modifications (whether due to casualty or otherwise) to the Service Trucks and/or Route Trucks but do not decrease the number of such types of Vehicles being transferred to

Buyer below the number set forth in Section 6.6(b), or (C) are not described in clauses (A) or (B) above and are necessary to correct any representation or warranty made by Seller in this Agreement, including the Schedules hereto, which has been rendered inaccurate thereby and which, individually or in the aggregate, do not result in Losses to which Buyer is entitled to indemnity pursuant to Section 8.2 in excess of one percent (1)% of the Purchase Price (without regard to the Basket or Mini-Basket) (the Changes referred to in this clause (C) being collectively called “Unanticipated Changes”). If Seller makes a Permitted Stipulated Update to reflect an Unanticipated Change, Buyer shall retain its right to seek indemnification pursuant to Section 8.2 following the Closing Date with respect to such Unanticipated Change regardless of any other provision of this Section 6.6(a), and to the extent that such indemnification pertains to a casualty at the Houston Plant or the Oklahoma City Plant which involves Losses of one percent (1%) of the Purchase Price or less, Buyer’s right to indemnification on account of such Permitted Stipulated Update or on account of a breach of Section 4.10(b) if there has been no Permitted Stipulated Update shall not be subject to the Basket or Mini-Basket.

(b) Notwithstanding anything in this Agreement to the contrary, at the Closing, Seller shall convey, or assign its leasehold interest, as applicable, to Buyer not less than 220 Route Trucks and 81 Service Trucks.

6.7. Mixed Use Contracts.

(a) At Closing, Seller shall provide to Buyer the benefits under, or assign to Buyer its rights under, or obtain a separate contract to be included in the Purchased Contracts for, the portion of the non-customer Mixed Use Contracts relating exclusively to the DSD Business, as set forth on Schedule 6.7, and Buyer shall assume the Liabilities of Seller with respect to such portions of such Mixed Use Contracts. To the extent that a third party’s consent is required to assign any portion of a non-customer Mixed Use Contract which is to be assigned and assumed pursuant to Schedule 6.7, Seller will use commercially reasonable efforts (which shall not include the expenditure of any money to any third party in exchange for such consent) to obtain such consent. If such a required consent is not obtained, then subject to Section 1.2, Seller shall provide Buyer the benefits and Buyer shall assume the Liabilities, in each case relating exclusively to the portions of each such Mixed Use Contract pertaining to the DSD Business. In no event shall Seller be required to provide Buyer the benefits of (i) any non-customer Mixed Use Contract at any time after the date that is two (2) years after the Closing Date, or (ii) any Mixed Use Contracts relating to the purchase by Seller of green coffee, tea, Liquid Coffee concentrate, cocoa and cappuccino products, Machines and Spare Parts, and Contracts relating to software and information technology services or products; provided however, that the foregoing shall not limit the rights of the Buyer under any of the Operational Agreements.

(b) With respect to each Mixed Use Contract which relates to sales to a Shared Customer pursuant to both the DSD Business and the NSO Business, the parties agree that promptly following the Closing, Seller shall introduce Buyer to each such customer and the parties shall work together to obtain separate contracts with each such customer as soon as

practicable (but neither party shall have any obligation to spend any money to obtain the customer’s consent to the foregoing). During the period that the parties seek to separate such Mixed Use Contracts, Buyer shall have the right to operate under the portion of each such Contract to the extent related exclusively to sales of the DSD Business provided that Buyer assumes the Liabilities related thereto. Notwithstanding the foregoing, nothing shall prohibit either party from competing with the other for sales to such Shared Customers, it being understood that Buyer shall have the right to seek to preserve and increase DSD Business sales to each such Shared Customer and Seller shall have the right to preserve and increase NSO Business sales to each such Shared Customer.

6.8. Release of Certain Obligations. Following the Closing, in the event that Seller’s rights under any Contract or Real Property Lease are assigned to Buyer, Buyer shall request a release of Seller’s obligations (whether absolute, contingent or otherwise) under such Contract or Real Property Lease (the “Release”). Seller and Buyer agree that this Section 6.8 shall not obligate Buyer to take any action other than to request a Release.

6.9. Access to Records; Facilities.

(a) Seller shall be entitled, for any lawful purpose, until the sixth (6th) anniversary of the filing of its U.S. Tax return for the year in which the Closing occurs, upon reasonable notice and during the regular business hours of Buyer, to have access to and to make copies of all financial information and Tax records of the DSD Business which relate to periods prior to the Closing. Subject to Section 6.12, Buyer shall retain such records for the period following the Closing described above, after which time Buyer may destroy or otherwise dispose of such business records without Seller’s consent.

(b) During the one (1) year period following the Closing, in the event that Buyer needs Information related to the operation of the DSD Business that is not part of the Purchased Assets, Seller shall use its commercially reasonable efforts to provide to Buyer copies of such Information which is not part of the Books and Records due to the provisions of clauses (C) or (D) of Section 1.1(j) promptly after Buyer’s reasonable request therefor; provided, however, that Seller shall have no obligation to provide Buyer with information which Seller reasonably deems to be competitive with the NSO Business or any information regarding Mixed Use Contracts with respect to which Buyer is not assuming Liabilities under this Agreement.

(c) Seller and its agents shall have access, upon reasonable advance notice and during business hours, (i) to the Transferred Facilities for one hundred twenty (120) days following the Closing Date for purposes of removing from such premises all property which does not constitute Purchased Assets and Buyer shall cooperate reasonably with Seller to accomplish such removal; and (ii) to the Books and Records and to Buyer’s employees as reasonably required by Seller to prepare its financial statements and satisfy other financial reporting obligations.

6.10. Buyer’s Insurance. For a period ending no sooner than the fifth (5th) anniversary of the Closing Date, Buyer agrees to carry and maintain in full force and effect general liability

(including products liability) insurance covering the DSD Business with an insurance company having a rating by A.M. Best and Company of at least A- with annual limits of not less than Five Million Dollars ($5,000,000.00) per occurrence and Five Million Dollars ($5,000,000.00) in the annual aggregate, provided all or part of Buyer’s insurance may be carried under a blanket policy or by means of a so-called “Umbrella” policy, which insurance shall name the Seller Parties as additional insureds and which shall provide Seller with at least thirty (30) days’ prior written notice of any termination or non-renewal thereof, and may have such deductibles as applies to Buyer’s general liability insurance generally.

6.11. Confidentiality Agreement.

(a) Buyer shall remain obligated under the provisions of that certain Confidentiality Agreement, dated March 26, 2008 (the “Confidentiality Agreement”), between Buyer and Seller, the terms of which are incorporated herein by reference; provided, however, that the obligations contained in this Section 6.11(a) shall terminate at the Closing.

(b) Following the Closing, Seller agrees to treat and hold confidentially, in the same manner as Seller treats and holds its own confidential information, and refrain from using any Information which Seller, in operating the DSD Business, treated and maintained as confidential; provided, however, that Seller’s obligation under this Section 6.11(b) shall not apply to the extent that such confidential Information pertains to Seller’s NSO Business or is or becomes part of the public domain through no breach of this Agreement by Seller or its Affiliates. Nothing in this Section 6.11(b) shall restrict or limit Seller or any of its direct or indirect wholly-owned subsidiaries from soliciting customers or competing with Buyer (including by means of the use of customer lists, pricing, preferences and purchase patterns of the DSD Business or the use of the Trademarks and Trade Names licensed to Seller under the Buyer Trademark License Agreement and the Superior Trademark License Agreement) except as provided in Section 6.18, and Buyer shall not assert any claim against Seller or any of its direct or indirect wholly-owned subsidiaries on account of Seller’s or any of its wholly owned subsidiaries’ use of such customer lists, pricing, preferences and purchase patterns or such Trademarks and Trade Names in connection with Seller’s (or any of its direct or indirect wholly-owned subsidiaries’) solicitation of customers and competition with Buyer. Further, Seller shall not remain obligated under this Section 6.11(b) to the extent any Information is disclosed in connection with litigation between the parties or is required to be disclosed pursuant to Applicable Law; provided, that Seller shall provide Buyer with prompt notice of the need to disclose Information pursuant to Applicable Law so that Buyer may seek a protective order or other appropriate remedy. In the event that such protective order or other remedy is not obtained, Seller shall furnish only that portion of the Information which is legally required and shall exercise its commercially reasonable efforts to obtain confidential treatment of the Information.

(c) The parties shall treat confidentially, and shall not disclose to any person or entity, other than their respective employees and representatives who are informed of, and agree to maintain the confidentiality required by, this Section 6.11(c), the Confidential Operating

Agreement Terms. “Confidential Operating Agreement Terms” shall mean the pricing, length of term and other provisions of the Operating Agreement which Buyer and Seller mutually identify as requiring confidential treatment in order to protect the competitive interests of one or both of them. In the event of litigation between the parties, or any requirement of disclosure under Applicable Law, including Buyer’s filing of Operating Agreements with the Securities and Exchange Commission or other applicable regulatory body, the parties shall seek to redact from any public filing and obtain confidential treatment of all Confidential Operating Agreement Terms; provided, however, that if either party is required to disclose Confidential Operating Agreement Terms pursuant to Applicable Law, such party shall seek to obtain a protective order (and in the case of securities law compliance and filings, seek confidential treatment) and shall provide the other party with prompt written notice of the need to disclose so that the other party may also seek a protective order or other appropriate remedy, or comment upon any confidentiality request. In the event that such protective order, other remedy or request is not obtained, the disclosing party shall furnish only that portion of the Confidential Operating Agreement Terms which it is legally required to disclose and shall exercise its commercially reasonable effort to obtain confidential treatment of the balance of such Terms. Without limiting the generality of the foregoing, to the extent that Buyer concludes, after consultation with securities counsel, that any of the Operating Agreements is required to be filed with the SEC under applicable law, Buyer will (i) prepare a confidential treatment request letter and redacted form of agreement (that does not include any Confidential Operating Agreement Terms) in accordance with SEC rules and regulations, (ii) provide Seller a copy of such drafts for its review and comment not less than five business days in advance of the intended filing date, (iii) give due consideration to and make commercially reasonable efforts to implement all reasonable comments of Seller, and (iv) keep Seller apprised of status of such submission and promptly furnish Seller with any SEC comments provided to Buyer with respect thereto and promptly furnish Seller with copies of all correspondence to and from any regulatory authority with respect thereto.

6.12. Tax Matters. Seller and Buyer shall (i) each provide the other with such assistance as may reasonably be requested by any of them in connection with the preparation of any return, audit, or other examination by any Taxing Authority or judicial or administrative proceedings relating to Liability for Taxes, (ii) each retain and provide the other with any records or other information that may be relevant to such return, audit or examination, proceeding or determination, and (iii) each provide the other with any final determination of any such audit or examination, proceeding, or determination that affects any amount required to be shown on any Tax return of the other for any period. Without limiting the generality of the foregoing, Buyer and Seller shall each retain, until the applicable statutes of limitations (including any extensions) have expired, copies of all Tax returns, supporting work schedules, and other records or information that may be relevant to such returns for all Tax periods or portions thereof ending on or before the Closing Date.

6.13. Use of Names.

(a) Other than the DSD Business Marks, the Seller Parties are not conveying ownership rights or, except as expressly provided in the Operational Agreements, granting Buyer a license to use any of the Trademarks of Seller or any Affiliate of Seller, including the Trademarks or Trade Names “Sara Lee,” “Pickwick,” “Paradise,” “Douwe Egberts,” “Kayo,” “Maryland Club,” “Laurentis,” “Butternut,” “Java Coast,” “La Touraine” or any mark or name that is similar in sound or appearance to the “Sara Lee” mark or name or any other marks or names mentioned above (collectively, the “Retained Names and Marks”) and, after the Closing, Buyer shall not, and shall not permit any of its Affiliates to, use in any manner the Retained Names and Marks or any mark confusingly similar to the Retained Names and Marks, except as provided in the Operational Agreements and this Section 6.13. In the event Buyer or any Affiliate of Buyer violates any of its obligations under this Section 6.13 (and does not limit its use of the Retained Names and Marks as provided pursuant to any of the Operational Agreements), Seller and its Affiliates may proceed against it in law or in equity for such damages or other relief as a court may deem appropriate. Buyer acknowledges that a violation of this Section 6.13 may cause Seller and its Affiliates irreparable harm which may not be adequately compensated for by money damages. Buyer therefore agrees that in the event of any actual or threatened violation of this Section 6.13, Seller and each of its Affiliates shall be entitled, in addition to other remedies that they may have, to a temporary restraining order and to preliminary and final injunctive relief against Buyer or such Affiliate of Buyer to prevent any violations of this Section 6.13.

(b) Except as expressly provided in the Operational Agreements, Buyer shall, and shall cause each of its Affiliates to, cease promptly, but in no event later than one (1) year after the Closing Date, using any (i) existing advertising or promotional materials, including brochures, catalogs, websites and other similar items, and (ii) existing stationery, business cards, business forms, packaging and other similar items, in each case that contain anywhere thereon any of the Retained Names and Marks; provided, however, that Buyer shall, when using items referred to in clause (ii) in the context of entering into or conducting contractual relationships, make reasonably clear to all other applicable parties that Buyer or such Affiliate of Buyer, rather than Seller or any Affiliate of Seller, is the party entering into or conducting the contractual relationship; and provided, further, that Buyer shall ensure that personnel of the DSD Business using such items shall not, and shall have no authority to, hold themselves out as officers, employees or agents of Seller or any Affiliate of Seller.

(c) Buyer shall have the right to exhaust all existing inventories of finished products and existing work in progress that contain as part of the physical products themselves any of the Retained Names and Marks, provided that Buyer shall use its reasonable efforts to dispose of such finished products within a reasonable period not to exceed six (6) months after the Closing Date.

6.14. Negative Covenant. Upon execution of this Agreement, the Seller Parties shall, and shall cause each of their respective Affiliates and Representatives (including, without limitation, investment bankers, attorneys and accountants) to, immediately discontinue any

negotiations or discussions with any Person (other than Buyer) relating to any business combination transaction involving the DSD Business Realty, or the Purchased Assets (regardless of form) other than the sale of control of Seller or the sale of inventory in the ordinary course of the DSD Business. The Seller Parties shall not, and shall cause their Affiliates and Representatives not to, at any time after the execution of this Agreement and until the earlier of the Closing Date or the termination of this Agreement pursuant to Section 9.1, take any action to: (a) solicit, encourage, initiate or facilitate the making of any Acquisition Proposal; (b) enter into an agreement with respect to any Acquisition Proposal; (c) participate in discussions or negotiations with, (d) respond to any inquiries or proposals by, (e) distribute any information about the DSD Business to, or (f) otherwise cooperate in any other way with any third party with respect to, or in connection with, any Acquisition Proposal. An “Acquisition Proposal” means any inquiry, proposal or offer from any third party relating to any direct or indirect acquisition or purchase of Realty or all or substantially all of the assets of the DSD Business other than Inventory in the ordinary course of the DSD Business.

6.15. IT Carve Out. Prior to the Closing, Seller shall carve out, in form reasonably satisfactory to Buyer and Seller, all data and systems related to the DSD Business to enable them to run separately as of the Closing (the “IT Carve Out”). The IT Carve Out shall include a number of key reports (e.g., those related to Route and customer optimization models) to be agreed upon by the parties. Buyer agrees that regardless of whether the Acquisition is consummated, Buyer shall reimburse Seller for all reasonable costs that Seller or any of Seller’s Affiliates incur in performing the IT Carve Out as set forth in this Section 6.15 (the “IT Carve Out Costs”); provided, however, if the failure to consummate the Acquisition is due to the breach of any of the provisions of this Agreement by any Seller Party, but only to the extent that the act(s) or omission(s) resulting in such breach were in the control of such Seller Party, Buyer shall have no obligation to reimburse Seller for any portion of the IT Carve Out Costs. It is expressly understood and agreed that Seller may engage third-party contractors to perform the IT Carve Out and that the costs of such contractors shall be included as part of the IT Carve Out Costs. Following the Closing, Buyer shall have the right to utilize the IT Carve Out pursuant to the terms of the Seller Transition Services Agreement but shall not acquire any ownership or other rights with respect thereto except to the extent included in the Purchased Assets hereunder. Buyer shall reimburse Seller for the IT Carve Out Costs on the date that is the earlier of (y) the Closing, or (z) the date that is five (5) days following the termination of this Agreement under Article IX.

6.16. Brew Equipment Service; DSD Referral. The Seller Parties and Buyer shall use commercially reasonable efforts to cooperate with each other following the Closing such that any brew and liquid coffee equipment at the locations of Shared Customers are serviced by Buyer in the case of brew and liquid coffee equipment included in the Purchased Assets and by Seller in the case of all other brew and liquid coffee equipment at the locations of Shared Customers; provided, however, that Seller will not be required to provide Buyer with any benefits or use of Seller’s computer equipment system which track service of brew equipment. For the six (6) month period following the Closing, the Seller Parties shall use commercially reasonable efforts

to refer all customer inquiries that relate to DSD Business, other than inquiries relating to the functions of the DSD Business retained by the Seller Parties (e.g., accounts receivables and payables), to Buyer.

6.17. Shared Customers. Seller shall use commercially reasonable efforts to introduce Buyer to the Shared Customers and assist in the transition of the DSD Business accounts of such Shared Customers to Buyer prior to Closing; provided that nothing in this Agreement shall restrict Seller’s ability to compete for any Shared Customers or any other customers following the Closing, except to the extent of the restrictions set forth in Section 6.18.

6.18. Limited Non-Competition. For a period of three (3) years from and after the Closing Date, neither Seller nor any Affiliate of Seller shall, in the Prohibited Areas, directly or indirectly, either alone or as a stockholder, partner, consultant, owner, agent, creditor (other than a trade creditor in the ordinary course of business consistent with past practices), coventurer of any other Person, or in any other capacity own, manage, operate, join, engage, control or participate in the ownership, management, operation or control of, in connection with, any profit or non-profit business or organization engaged in the business utilizing a network of facilities and vehicles to deliver coffees and teas directly to customer locations where such products are consumed (the “Prohibited Business”); provided, however, nothing in this Section 6.18 shall restrict Seller or any Affiliate of Seller from engaging in the NSO Business so long as the NSO Business is not conducted through the foregoing method of distribution or from acquiring a Prohibited Business as part of a larger transaction where such Prohibited Business represents sales of ten percent (10%) or less for the most recently completed fiscal year of the business being acquired by Seller or such Affiliate in such acquisition. The term “Prohibited Area” shall mean the Las Vegas, Nevada, and Atlantic City, New Jersey, metropolitan statistical areas. Seller acknowledges that a breach of the covenants contained in this Section 6.18 may cause irreparable damage to Buyer, the exact amount of which may be difficult to ascertain, and that the remedies at law for such breach may be inadequate. Accordingly, Seller agrees that if Seller breaches the covenant contained in this Section 6.18, in addition to any other remedy which may be available at law or in equity, Buyer shall be entitled to seek specific performance and injunctive relief.

6.19. Nonsolicitation of Certain Employees. For a period beginning on the Closing Date and ending on the second anniversary of the Closing Date,

(a) neither the Seller Parties nor any Affiliate of any Seller Party shall solicit for employment or hire any Hired Personnel without the prior written consent of Buyer; provided that Seller Parties and their Affiliates shall not be prohibited from employing any such Person who contacts the Seller Parties or their Affiliates in response to any general solicitation or advertising not directed at any such employee or group of employees. Each Seller Party acknowledges that a breach of the covenants contained in this Section 6.19(a) may cause irreparable damage to Buyer, the exact amount of which may be difficult to ascertain, and that the remedies at law for such breach may be inadequate. Accordingly, each Seller Party agrees

that if such Seller Party breaches the covenant contained in this Section 6.19(a), in addition to any other remedy which may be available at law or in equity, Buyer shall be entitled to seek specific performance and injunctive relief; and

(b) neither Buyer nor any of its Affiliates shall solicit for employment or hire any Person (other than a Person listed on Schedule 4.20(b)) who is an employee of Seller Parties or their Affiliates as of the Closing Date whom Buyer meets or becomes aware of in connection with the Acquisition without the prior written consent of Seller; provided that Buyer and its Affiliates shall not be prohibited from employing any such Person who contacts Buyer or its Affiliates in response to any general solicitation or advertising not directed at any such employee or group of employees. Buyer acknowledges that a breach of the covenants contained in this Section 6.19(b) may cause irreparable damage to the Seller Parties, the exact amount of which may be difficult to ascertain, and that the remedies at law for such breach may be inadequate. Accordingly, Buyer agrees that if Buyer breaches the covenant contained in this Section 6.19(b), in addition to any other remedy which may be available at law or in equity, the Seller Parties shall be entitled to seek specific performance and injunctive relief.

6.20. Accounts Receivable. Concurrent with the Closing, the parties are entering into the Seller Transition Services Agreement pursuant to which Seller will provide cash collection services to Buyer. Accordingly, the following terms of this Section 6.20 shall be subject to the Seller Transition Services Agreement notwithstanding any provision below to the contrary:

(a) Given that Seller is retaining all accounts receivable arising from transactions of the DSD Business on or prior to the Closing Date (“Seller Receivables”) the parties agree to cooperate with one another in the collection of Seller Receivables on the terms set forth in this Section 6.20. All collections from DSD Customers received by either Seller or Buyer from the Closing Date forward shall be applied to the oldest receivable first unless otherwise specified in writing by such customer (and then only if such customer has not been induced by Buyer to make such specification) or unless such older receivable is under dispute by the DSD Customer. In addition, the parties agree that (a) Seller shall provide to Buyer on or promptly following the Closing a list of all Seller Receivables existing as of the Closing Date (“DSD Collection Customers”), which list shall set forth for each Seller Receivable the name of the debtor, the date of the invoice and the balance due, (b) the parties shall exchange with one another records of all payments received from the DSD Collection Customers, (c) for a period of 30 days after the Closing, Buyer shall instruct its employees to wire to Seller’s designated bank account (as set forth in writing by Seller, the “Collection Account”) all money received by them during said 30 day period from DSD Collection Customers and also shall instruct DSD Collection Customers to continue paying moneys owed for DSD Product to Seller’s Collection Account for said 30 day period; (d) commencing on the 31st day after the Closing, the parties shall exchange with one another at least monthly the collections received by them from DSD Collection Customers and true up payments that either party may owe the other until the Seller Receivables are paid in full. In the event that Seller receives money in Seller’s Collection Account from DSD

Collection Customers that is not associated with Seller Receivables or other amounts due Seller from such customers, Seller shall remit such monies to Buyer.

(b) Buyer, as Seller’s agent for collection, agrees to use the same effort in the collection of Seller Receivables as Buyer uses for its own accounts receivable (which may include referral to a collection agency); provided, that (i) Buyer shall not be required or permitted, without the prior written approval of Seller, to commence litigation, employ legal counsel or make any other extraordinary collection efforts, and (ii) Buyer’s obligation to act as Seller’s agent in the collection of the Seller Receivables under this Section 6.20 shall terminate one hundred twenty (120) days after the Closing Date (the “Collection Period”). During the Collection Period, neither Seller nor any of its Affiliates shall engage in any collection efforts against the DSD Collection Customers. At the end of the Collection Period, Buyer shall return to Seller all files concerning the collection or attempts to collect the Seller Receivables and Buyer’s responsibility for the collection of the Seller Receivables shall cease; provided, Buyer shall promptly pay over to Sellers any amounts received with respect to the Seller Receivables after the Collection Period, and Seller shall continue to be obligated to promptly pay over to Buyer any amounts with respect to receivables arising from DSD Business transactions after the Closing Date.

6.21. Removal of Brew Equipment Inventory. Buyer shall cause the removal of all Brew Equipment Inventory acquired by Buyer and located at Seller’s Washington, PA Facility to be removed from said Facility within twenty (20) business days after the Closing. Seller shall have such Brew Equipment Inventory segregated and identified as Buyer’s property as of the Closing Date.

6.22. Return of Consumable Inventory. If this Agreement is terminated prior to Closing for any reason whatsoever, Buyer shall, at its cost and expense, return to Seller, at the Facility from which the Consumable Inventory was shipped by Seller, all Consumable Inventory transferred by Seller to any Buyer Site prior to the Closing (regardless of whether such Consumable Inventory was received by or is in transit to the Buyer Site prior to the Closing). During the period of time prior to Closing that any Consumable Inventory is in Buyer’s possession at a Buyer Site, (a) Buyer shall store and maintain such Consumable Inventory in the same condition as such Consumable Inventory was in upon receipt by Buyer (it being agreed that Buyer shall not use, consume, sell, move, manufacture or alter such Consumable Inventory in any manner whatsoever prior to the Closing Date), (b) Buyer shall not own or have any right, title or interest in such Consumable Inventory unless and until the consummation of the Acquisition, (c) Buyer shall designate all Consumable Inventory received by Seller as property of Seller and shall hold such property as a bailee, and (d) Buyer shall consent to Seller or Seller’s designee(s) entering the Buyer Site(s) where such Consumable Inventory is stored to conduct the physical count of Consumable Inventory contemplated by Section 2.6(a) herein.

6.23. Further Assurances. Upon the terms and subject to the conditions contained herein, each of the parties hereto agrees (i) before the Closing, to use all reasonable efforts to

take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement and the Additional Documents (including satisfaction, but not waiver, of the Closing conditions set forth in Article VII below), (ii) after the Closing, to execute any documents, instruments or conveyances of any kind which may be necessary to carry out any of the transactions contemplated hereunder or thereunder, and (iii) before and after the Closing, to cooperate with each other in connection with the foregoing, including using reasonable efforts to effect all necessary registrations and filings, including without limitation submissions of information requested by Governmental Authorities. Notwithstanding the foregoing, except as set forth in Section 7.1(e), no Seller Party shall be required to obtain any waivers, consents or approvals from other parties to the Purchased Contracts; or obtain any Permits (or any consents, waivers or approvals related thereto) that Buyer may require to operate the DSD Business. In addition to the foregoing, not later than fifteen (15) days following the Closing Date, Buyer shall cause the Seller’s United States Department of Transportation number located on each of the Vehicles to be removed or concealed. To the extent that Seller seeks to assert any warranty Claim retained by Seller pursuant to Section 1.3 (u) with respect to a warranty that is part of the Purchased Assets, Buyer shall reasonably cooperate with Seller in the effort to recover such Claim.

6.24. Buyer’s Pre-Closing Conduct. During the period from the date of this Agreement until the Closing, neither Buyer nor any of its Representatives shall take any action to influence or induce Seller’s employees to encourage Shared Customers to shift their purchases of coffee, tea and related products from non-DSD sources (such as Seller’s NSO Business) to purchases from the DSD Business.

6.25. Labor Contracts. With respect to the Labor Contracts listed on Schedule 1.1(g)-2, Buyer and Seller shall each use commercially reasonable efforts to obtain separate agreements with the unions who are parties thereto promptly following the Closing.

6.26. Embodiments of DSD Intellectual Property. Following the Closing, Seller shall use commercially reasonable efforts to provide to Buyer all tangible embodiments of the DSD Intellectual Property identified by Seller in any materials relating solely to the DSD Business. After the Closing, Seller Parties shall not, and shall not permit any of their Affiliates to, use in any manner the DSD Intellectual Property or any mark confusing similar to the DSD Business Marks, except as provided in the Operational Agreements. In the event Seller Parties or any of their Affiliates violate any of their obligations under this Section 6.26 (and does not limit its use of the DSD Business Marks as provided pursuant to any of the Operational Agreements), Buyer and its Affiliates may proceed against it in law or in equity for such damages or other relief as a court may deem appropriate. Seller Parties acknowledge that a violation of this Section 6.26 may cause Buyer and its Affiliates irreparable harm which may not be adequately compensated for by money damages. Seller Parties therefore agree that in the event of any actual or threatened violation of this Section 6.26, Buyer and each of its Affiliates shall be entitled, in addition to other remedies that they may have, to a temporary restraining order and to

preliminary and final injunctive relieve against Seller Parties or such Affiliate of Seller Parties to prevent any violations of this Section 6.26.

6.27. Authorized Information. Buyer shall not induce or authorize any Person to divulge or use information which is confidential information of Seller unless such information becomes part of the public domain through no act or omission by Buyer, its Affiliates or its employees, except that the foregoing shall not apply to Buyer’s right to obtain Authorized Information from the Hired Personnel (who Seller agrees may disclose such Authorized Information to Buyer following the Closing) or to Buyer’s use of Authorized Information as permitted in this Section 6.27. The term “Authorized Information” means the customer lists, pricing, preferences and purchase patterns of Seller’s NSO Business. Nothing in this Section 6.27 shall restrict or limit Buyer or its direct or indirect wholly-owned subsidiaries from soliciting customers or competing with Seller (including by means of use of Authorized Information or the use of the Trademarks and Trade Names licensed to Buyer under the Seller Trademark License Agreement), and Seller shall not assert any claim against Buyer or any of its direct or indirect wholly-owned subsidiaries on account of Buyer’s (or any of its direct or indirect wholly-owned subsidiaries’) use of Authorized Information in connection with Buyer’s (or any of its direct or indirect wholly-owned subsidiaries’) solicitation of customers and competition with Seller and the use of Authorized Information; provided, however, that given Seller’s confidentiality obligations to its NSO customers, Buyer, its Affiliates and its employees shall maintain the confidentiality of such Authorized Information. Further, Buyer shall not remain obligated under this Section 6.27 to the extent any information is disclosed to the public in connection with litigation between the parties or is required to be disclosed pursuant to Applicable Law; provided, that Buyer shall provide Seller with prompt notice of the need to disclose information pursuant to Applicable Law so that Seller may seek a protective order or other appropriate remedy. In the event that such protective order or other remedy is not obtained, Buyer shall furnish only that portion of the information which is legally required and shall exercise its commercially reasonable efforts to obtain confidential treatment of the information. Seller shall retain the right to assert any claim against Buyer, its Affiliates, and employees, including the Hired Personnel if any of them breaches this Section 6.27.

6.28. Buyer Financing. Buyer agrees (i) prior to the Closing, to continue to diligently use its commercially reasonable efforts to obtain Bank Financing from banks or other commercial lenders in an amount not less than $20,000,000, and (ii) to the extent that the Note is used to satisfy any portion of the Purchase Price, to continue to diligently use its commercially reasonable efforts to obtain Bank Financing in an amount sufficient to satisfy all amounts owing to Seller under the Note and to use such financing to payoff all such amounts outstanding as quickly as practicable following the Closing.

ARTICLE VII.
CONDITIONS TO CLOSING

7.1. Conditions to Obligations of Buyer. All obligations of Buyer under this Agreement are subject to the fulfillment, at or prior to the Closing, of the following conditions, any of which may be waived by Buyer, in its sole discretion:

(a) All representations and warranties made by the Seller Parties in this Agreement, as amended to account for any Permitted Stipulated Updates, shall be true and correct in all material respects (other than those qualified by materiality which shall be true and correct in all respects) as of the date of this Agreement and as of the Closing Date, as though made at and as of the Closing Date, except to the extent that such representations and warranties speak as of a specific date, without giving effect to any supplements or amendments to the Schedules made by any Seller Party after the date hereof through the Closing Date, and the Seller Parties shall have delivered all documents and agreements described in Section 3.2 and the Seller Parties shall have otherwise performed in all material respects all covenants, obligations and conditions required under this Agreement to be performed by it on or prior to the Closing Date.

(b) The Purchased Assets shall be free and clear of all Liens, other than Permitted Liens.

(c) No action, suit, or proceeding shall be pending before any Governmental Authority or before any arbitrator wherein an unfavorable injunction, Judgment, decree, restraining order or other ruling or order is reasonably likely to be successful that would (i) prevent the consummation of any of the transactions contemplated by this Agreement or the Additional Documents, (ii) cause any of the transactions contemplated by this Agreement or the Additional Documents to be rescinded following consummation, or (iii) materially and adversely affect the right of Buyer to own the Purchased Assets and to operate the DSD Business and to control Realty, and no such injunction, Judgment, decree, restraining order or other ruling or order shall be in effect.

(d) Buyer shall have received from Chicago Title Insurance Company (the “Title Company”) ALTA 2006 owner’s policies or equivalent TLTA policies of title insurance (each, a “Title Policy”) in an amount for each parcel of the Owned Real Property which shall be the amount that is equal to the fair market value for the parcel based on Buyer’s valuation for the parcel, subject to the Title Company’s approval, insuring title to each such parcel in the name of Buyer, subject only to the Permitted Encumbrances and Assumed Liabilities.

(e) Buyer shall have received all third-party (governmental and non-governmental) consents, permits and approvals listed on Schedule 7.1(e) (which consents or approvals shall also release Seller and its Affiliates from any obligations thereunder).

(f) The parties shall have entered into each of the Operational Agreements and the Option Agreement, and each of the manufacturers shall have duly executed and delivered the Cappuccino and Cocoa Transition Agreement, as applicable.

(g) The IT Carve Out shall have been completed as contemplated by Section 6.15.

(h) The Historical Financial Statements described on Exhibit P and any others required by the SEC as contemplated by Section 6.4(d) shall have been delivered to Buyer.

(i) Since September 27, 2008, except as provided in Schedule 4.8(a) (without taking into account any Permitted Stipulated Update or other supplement to Schedule 4.8(a)), no event or circumstance that results in or will result in a Material Adverse Effect shall have occurred.

7.2. Conditions to Obligations of the Seller Parties. All obligations of the Seller Parties under this Agreement are subject to the fulfillment, at or prior to the Closing, of the following conditions, any of which may be waived by Seller, in its sole discretion:

(a) All representations and warranties made by Buyer in this Agreement shall be true and correct in all material respects (other than those qualified by materiality which shall be true and correct in all respects) as of the date of this Agreement and as of the Closing Date as though made at and as of the Closing Date, except to the extent that such representations and warranties speak as of a specific date, and Buyer shall have delivered all funds, documents and agreements described in Section 3.3 and otherwise performed in all material respects all covenants, obligations and conditions required under this Agreement to be performed by it on or prior to the Closing Date.

(b) No action, suit, or proceeding shall be pending before any Governmental Authority or before any arbitrator wherein an unfavorable injunction, Judgment, decree, restraining order or other ruling or order is reasonably likely to be successful that would (i) prevent the consummation of any of the transactions contemplated by this Agreement or the Additional Documents, (ii) cause any of the transactions contemplated by this Agreement or the Additional Documents to be rescinded following consummation, or (iii) materially and adversely affect the right of Buyer to own the Purchased Assets and to operate the DSD Business and to control Realty, and no such injunction, Judgment, decree, restraining order or other ruling or order shall be in effect.

ARTICLE VIII.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
AND INDEMNIFICATION

8.1. Survival of Representations and Warranties. No party or other Person entitled to indemnification under this Article VIII shall make or assert any Indemnity Claim under

Section 8.2(a) or 8.3(a) below due to any inaccuracy or breach of any representation or warranty in this Agreement after the eighteen (18) month anniversary of the Closing Date. Notwithstanding the foregoing, the eighteen (18) month cut off period described above shall not apply to (a) any Indemnity Claim arising under Sections 4.1 (Corporate Organization), 4.2(a) (No Violation), 4.3 (Authority), Section 4.9 (Payment of Taxes), 4.12 (but only the first sentence thereof) (Tangible Personal Property), 4.15 (but only the third sentence thereof) (Intellectual Property), 5.1 (Corporate Organization) or 5.2 (Authority), it being agreed that the representations and warranties in those Sections shall survive through the period of the applicable statute of limitations (including all waivers and extensions thereof); and (b) any Indemnity Claim arising under Section 4.21 (Hazardous Substances), it being agreed that the representations and warranties in Section 4.21 shall continue until the three (3) year anniversary of the Closing Date.

Any party or other Person shall be entitled to its indemnification rights under this Article VIII only to the extent that such party or Person asserted in writing a specific Indemnity Claim prior to the date by which an Indemnity Claim relating to the representations and warranties in question must be commenced pursuant to this Section 8.1, in which event the relevant representations and warranties shall continue in effect and remain a basis for indemnity with respect to each such asserted Indemnity Claim until such Indemnity Claim is finally resolved (pursuant to a non-appealable order by a court of competent jurisdiction or agreement of the Seller and Buyer) and all obligations with respect thereto are fully satisfied.

8.2. Seller’s Indemnification. Subject to the further provisions of this Article VIII, Seller shall indemnify, defend and hold harmless Buyer and its Affiliates and their respective Representatives (collectively, “Buyer Indemnified Parties”), from and against and in respect of any and all Losses, net of any insurance proceeds or Tax benefits actually recovered or recoverable by any Buyer Indemnified Party (it being agreed that each Buyer Indemnified Party shall use commercially reasonable efforts to seek and obtain such recoveries), resulting from, in connection with or arising out of:

(a) any inaccuracy or breach of any representation or warranty made by any Seller Party in Article IV of this Agreement;

(b) the failure of any Seller Party to comply with any of the covenants in this Agreement;

(c) in the event that Buyer discontinues operations at the Hayward, CA Facility during the 180-day period following the Closing, withdrawal liabilities in excess of $60,000.00 incurred by Buyer under the Multiemployer Plans related to said Facility on account of such shutdown;

(d) any Excluded Liability, including any Excluded Liability asserted against Buyer by reason of Buyer’s status as a transferee or successor of the DSD Business or the Purchased

Assets and Liabilities of Seller under Section 6.7 relating to Mixed Use Contracts to be performed by Seller; and

(e) any Liability to the extent relating to the ownership or use of the Purchased Assets or the operation of the DSD Business on or prior to the Closing, except the Assumed Liabilities.

8.3. Buyer’s Indemnification. Subject to the further provisions of this Article VIII, Buyer shall indemnify, defend and hold harmless Seller and its Affiliates and their respective Representatives (collectively, “Seller Indemnified Parties”) from and against and in respect of any and all Losses, net of any insurance proceeds or Tax benefits actually recovered or recoverable by any Seller Indemnified Party (it being agreed that each Seller Indemnified Party shall use commercially reasonable efforts to seek and obtain such recoveries), resulting from, in connection with, or arising out of:

(a) any inaccuracy or breach of any representation or warranty made by Buyer in Article V of this Agreement;

(b) the failure of Buyer to comply with any of the covenants in this Agreement;

(c) any Assumed Liability, including Liabilities of Buyer under Section 6.7 relating to Mixed Use Contracts to be performed by Buyer;

(d) any Liability to the extent relating to the operation by Buyer or Buyer’s Affiliates, successors or assigns of the Purchased Assets or the DSD Business after the Closing, including any obligations of Buyer to the Hired Personnel or their representatives under the National Labor Relations Act, as amended from time to time;

(e) any claim made by any employee or former employee of the DSD Business at any time under any Buyer Employee Plan for benefits, compensation, bonus, severance, salary or benefits continuation, or retention pay;

(f) any breach by Buyer of the covenant in Section 6.2(d) and any withdrawal liability or secondary Liability (or payments relating thereto) incurred by Seller on or after the Closing as set forth in Section 1.4(d) in relation to any Assumed Multiemployer Plan and as set forth in Section 6.2(d);

(g) any Liabilities incurred by Seller under the WARN Act and any state WARN statutes as a result of any layoffs by Buyer at any Transferred Facility following the Closing, except to the extent attributable to any inaccuracy of the list provided by Seller under Section 3.2(h)(i);

(h) any Liability arising under the WARN Act or any applicable state WARN statute arising out of or relating to the sale transaction as provided herein, including any Liability

resulting from any employment losses initiated by the Buyer after the Closing Date, except to the extent attributable to any inaccuracy of the list provided by Seller under Section 3.2(h)(i);

(i) any claims for and Liabilities under the Severance Plans to the extent such Liabilities arise from (i) the termination by Seller of the employment of a Person to whom Buyer is obligated to offer employment under Section 6.2(a) by reason of an alleged failure of Buyer to provide benefits comparable to those provided by Seller immediately prior to the Closing, or (ii) termination by Seller by reason of Buyer’s breach of Section 6.2(a);

(j) any Liability for which Buyer is obligated pursuant to Section 1.2;

(k) Buyer’s failure to assume and comply with the Labor Contracts; and

(l) Buyer’s relocation of any Hired Personnel during the 90-day period following the Closing to any location other than an Approved Location.

8.4. Indemnification Procedures.

(a) Procedures Relating to Indemnification. In the event that a third party files a lawsuit, enforcement action or other proceeding against a party entitled to indemnification under this Article VIII (an “Indemnified Party”) or the Indemnified Party receives notice of, or becomes aware of a condition or event which may entitle such party to the benefit of any indemnity hereunder in connection with a claim by a third party (a “Third Party Claim”), the Indemnified Party shall give written notice thereof (the “Claim Notice”) promptly to each party obligated to provide indemnification pursuant to this Article VIII (an “Indemnifying Party”). The Claim Notice shall describe in reasonable detail the nature of the claim, including an estimate, if practicable, of the amount of damages that have been or may be suffered or incurred by the Indemnified Party attributable to such claim and the basis of the Indemnified Party’s request for indemnification under this Agreement. Notwithstanding the foregoing, failure by an Indemnified Party to provide notice on a timely basis of a Third Party Claim shall not relieve the Indemnifying Party of its obligations hereunder, unless, and then solely to the extent that, the Indemnifying Party is prejudiced thereby.

(b) Conduct of Defense. If a Third Party Claim is made against an Indemnified Party, the Indemnifying Party shall have the right, upon written notice to the Indemnified Party (the “Defense Notice”) within fifteen (15) days of its receipt from the Indemnified Party of the Claim Notice, to conduct at its expense the defense against such Third Party Claim in its own name, or, if necessary, in the name of the Indemnified Party; provided, however, that if (A) such claim seeks injunctive or other equitable relief involving the Indemnified Party or any of its Affiliates, (B) any insurance carrier for the Indemnified Party or any of its Affiliates requires, as a condition to such Person’s eligibility to recover insurance proceeds on account of any such claim, that such carrier control the defense of any such claim, or (C) the Indemnifying Party notifies the Indemnified Party that it is not required to provide indemnification for such claim, then, in any such case, the Indemnified Party shall be entitled to conduct the defense against such claim, at

the expense of the Indemnifying Party. When the Indemnifying Party conducts the defense, the Indemnified Party shall have the right to approve the defense counsel representing the Indemnifying Party in such defense, which approval shall not be unreasonably withheld or delayed, and in the event the Indemnifying Party and the Indemnified Party cannot agree upon such counsel within ten (10) days after the Defense Notice is provided, then the Indemnifying Party shall propose an alternate defense counsel, which shall be subject again to the Indemnified Party’s approval, which approval shall not be unreasonably withheld or delayed. If the Indemnifying Party assumes the defense of any Third Party Claim made against the Indemnified Party, the Indemnifying Party shall notify the Indemnified Party in writing at the point that the Indemnifying Party determines that it is not required to provide indemnification to the Indemnified Party under this Article VIII.

(c) Conduct by Indemnified Party. In the event that the Indemnifying Party shall fail to give the Defense Notice within the time and as prescribed by Section 8.4(b), or if the Indemnifying Party does not have the right to defend such Third Party Claim pursuant to Section 8.4(b), then in either such event, the Indemnified Party shall have the right to conduct such defense in good faith with counsel reasonably acceptable to the Indemnifying Party, but the Indemnified Party (or any insurance carrier defending such Third Party Claim on the Indemnified Party’s behalf) shall be prohibited from compromising or settling the Claim without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed. Failure at any time of the Indemnifying Party to diligently defend a Third Party Claim as required herein shall entitle the Indemnified Party to assume the defense and settlement of such Third Party Claim as if the Indemnifying Party had never elected to do so as provided in this Section. Notwithstanding anything contained in this Article VIII to the contrary, the Indemnified Party may, by prior written notice to the Indemnifying Party, assume the defense of any Third Party Claim if the Indemnified Party shall have been advised by counsel that there are one or more legal defenses available to the Indemnified Party which are different from or in addition to those available to the Indemnifying Party, and, in the reasonable opinion of the Indemnified Party and its counsel, counsel for the Indemnifying Party could not adequately represent the interests of the Indemnified Party because such interests would be in conflict with those of the Indemnifying Party.

(d) Cooperation. In the event that the Indemnifying Party does deliver a Defense Notice and thereby elects to conduct the defense of such Third Party Claim in accordance with Section 8.4(b), the Indemnified Party will cooperate with and make available to the Indemnifying Party such assistance, personnel, witnesses and materials that are reasonably relevant to such Third Party Claim as the Indemnifying Party may reasonably request. Each Indemnified Party shall reasonably consult and cooperate with each Indemnifying Party with a view towards mitigating Losses in connection with claims for which a party seeks indemnification under this Article VIII.

(e) Settlements. Without the prior written consent of the Indemnified Party (which shall not be unreasonably withheld or delayed), the Indemnifying Party (or any insurance carrier

defending such Third Party Claim on the Indemnifying Party’s behalf) will not enter into any settlement of any Third Party Claim if, pursuant to or as a result of such settlement, such settlement could lead to Liability or create any financial or other obligation on the part of the Indemnified Party for which the Indemnified Party is not entitled to indemnification hereunder. If the Indemnifying Party receives a firm offer to settle a Third Party Claim (other than a Third Party Claim seeking injunctive or other nonmonetary relief affecting the Indemnified Party) which releases the Indemnified Party completely in connection with such Third Party Claim, which offer the Indemnifying Party is permitted to settle under this Section 8.4, and the Indemnifying Party desires to accept such offer, the Indemnifying Party will give written notice to the Indemnified Party to that effect. If the Indemnified Party objects to such firm offer within ten (10) days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and, in such event, the maximum Liability of the Indemnifying Party as to such Third Party Claim will not exceed the amount of such settlement offer, plus costs and expenses paid or incurred by the Indemnified Party up to the point such notice had been delivered. Notwithstanding anything contained herein to the contrary, the Indemnifying Party (or any insurance carrier defending such Third Party Claim on the Indemnifying Party’s behalf) shall not agree, without the Indemnified Party’s consent, to the entry of any Judgment or settlement, compromise or decree that provides for injunctive or other nonmonetary relief affecting the Indemnified Party.

(f) Binding Obligations. Any Judgment entered or settlement agreed upon in the manner provided herein shall be binding upon the Indemnifying Party, and shall be conclusively deemed to be an obligation with respect to which the Indemnified Party is entitled to prompt indemnification hereunder, subject to the Indemnifying Party’s right to appeal an appealable Judgment or order.

8.5. Nature of Other Liabilities. In the event any Indemnified Party should have a claim against any Indemnifying Party hereunder which does not involve a Third Party Claim, the Indemnified Party shall transmit to the Indemnifying Party a written notice (the “Indemnity Notice”) describing in reasonable detail the nature of the claim and the basis of the Indemnified Party’s request for indemnification under this Agreement. If the Indemnifying Party does not notify the Indemnified Party within forty-five (45) days from its receipt of the Indemnity Notice that the Indemnifying Party disputes such claim (a “Dispute Notice”), the claim specified by the Indemnified Party in the Indemnity Notice shall, subject to the further provisions of this Article VIII, be deemed a Liability of the Indemnifying Party under this Article VIII.

8.6. Indemnification Limits and Restrictions.

(a) None of Buyer or any other Buyer Indemnified Party shall be entitled to any indemnity under Section 8.2(a) unless and until all Indemnity Claims by the Buyer Indemnified Parties exceed one percent (1%) of the Purchase Price in the aggregate (“Basket”), at which time the Person(s) seeking indemnification shall be entitled to recover all Losses in excess of the Basket; provided, however, that in no event shall the Seller Parties, individually or in the

aggregate, be liable for Losses pursuant to Section 8.2(a) in excess of ten percent (10%) of the Purchase Price, and further provided that in no event shall any Indemnified Party assert an Indemnity Claim which individually seeks recovery of less than $5,000.00 (“Mini Basket”). Notwithstanding anything herein to the contrary, (i) the Basket shall not apply to any Losses resulting from the inaccuracy or breach of any of the representations and warranties set forth in Sections 4.1 (Corporate Organization), 4.3 (Authority), 4.9 (Payment of Taxes), 4.12 (but only the first sentence thereof) (Ownership of Tangible Personal Property), 4.15 (but only the third sentence thereof) (Intellectual Property) and 4.22 (Brokers’ Fees and Commissions), and any Losses resulting from the commission of fraud by any Seller Party, and (ii) with respect to Losses that result from the inaccuracy or breach by a Seller Party of any representation or warranty pursuant to Section 4.21 (Hazardous Substances), in no event shall the Seller Parties, individually or in the aggregate, be liable for such Losses pursuant to Section 8.2(a) in excess of fifteen percent (15%) of the Purchase Price. For purposes of calculating the Basket, Claims which may not be asserted because of the Mini Basket shall not be counted. For the avoidance of doubt, no Excluded Liability is subject to any basket or cap even if the liability is also the subject of a representation or warranty by the Seller Parties.

(b) In no case shall Losses include (a) any incidental, consequential, indirect or special losses or damages (including, without limitation, lost profits, lost revenues and loss of business), whether foreseeable or not, whether occasioned by any failure to perform or the breach of any representation, warranty, covenant or other obligation under this Agreement or any Additional Document for any cause whatsoever, or (b) fees and expenses of more than one counsel with respect to any Indemnity Claim or Claims arising out of the same general allegations or circumstances.

8.7. Additional Limitations of Liability. Notwithstanding anything in this Article VIII to the contrary:

(a) Seller shall have no Liability to Buyer Indemnified Parties (for indemnification or otherwise) for any inaccuracy or breach of any representation or warranty to the extent that Buyer had knowledge at or prior to the time of Closing of such inaccuracy or breach.

(b) Subject to Section 8.6(b), Buyer Indemnified Parties may not recover Losses more than once for any specific facts, omissions or circumstances notwithstanding the fact that such facts, omissions or circumstances may constitute the breach of more than one representation or warranty; provided, however, that the parties recognize that there may be different types of Losses that arise from the same facts, omissions or circumstances.

(c) In the event that Seller pays any amount to any Buyer Indemnified Party or other Person pursuant to Section 8.2, or incurs any costs or expenses in defending any Third Party Claim for which Seller has no Liability either pursuant to Section 8.2 or because of the

application of the Basket and, pursuant to the provisions of this Article VIII, Seller is not required to pay such amount or incur such cost or expense because Seller has no Liability either pursuant to Section 8.2 or because of the application of the Basket, Buyer shall, promptly following Seller’s request therefor, reimburse Seller (i) for all such amounts paid or incurred in the case of any cost or expense for which Seller has no Liability pursuant to Section 8.2, or (ii) up to the amount of the Basket in the case of any cost or expense for which Seller has no Liability because of the application of the Basket.

(d) To the extent that any Material Contract required to be listed in any Schedule is not so listed, but Buyer accepts the benefits of such Material Contract after the Closing, Seller shall have no Liability to Buyer Indemnified Parties with respect to any Losses resulting from any breach of a representation or warranty as a result of such failure so to disclose such Material Contract except to the extent that Buyer is not aware, at any time prior to its acceptance of such benefits, of the material burdens imposed upon it by such Material Contract.

(e) No party shall exercise any right of set off or recoupment with respect to any Losses to which it claims a right of indemnity pursuant to this Article VIII, including, without limitation, in the case of Buyer, any right of setoff against amounts owed by Buyer under the Note, except that if Seller has any indemnity obligation under this Article VIII or otherwise under this Agreement, Seller shall have the right of set off such amount against the Note, such amount to be applied first to the accrued and unpaid interest and then the balance to the principal amount of the Note.

8.8. Exclusive Remedy. Except in the case of fraud and as provided in Section 6.13 and to the extent that any provision of this Agreement expressly provides for specific performance or injunctive relief, the rights and obligations of the parties under this Article VIII are the exclusive rights and obligations of the parties with respect to any breach of any representation, warranty, covenant or agreement in this Agreement or any Additional Document (other than the Operational Agreements) and shall be in lieu of any other rights or remedies to which the party entitled to indemnification hereunder would otherwise be entitled as a result of such breach.

ARTICLE IX.
TERMINATION AND ABANDONMENT

9.1. Methods of Termination. Subject to the provisions of Section 3.1 relating to the deferral of the Closing Date, this Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing:

(a) by mutual written consent of Buyer and Seller;

(b) by either Buyer or Seller:

(i) if the other party shall have failed to comply with any of its obligations or agreements contained in this Agreement required to be complied with or performed prior to the date of such termination, which failure to comply has not been cured within ten (10) business days following receipt by such other party of written notice of such failure to comply;

(ii) if there has been a breach by the other party of any representation or warranty made in this Agreement and such breach has not been cured within ten (10) business days following receipt by the breaching party of written notice of the breach;

(iii) if a Governmental Authority shall have issued an order, decree or ruling or taken any other action, in each case, permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable; or

(iv) if the Closing Date shall not have occurred on or before March 28, 2009,

provided, however, that the right to terminate this Agreement shall not be available to any party whose breach of this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before such date.

9.2. Procedure and Effect of Termination. In the event of termination of this Agreement by either Buyer or Seller, as provided in Section 9.1, this Agreement shall immediately become void and there shall be no Liability hereunder on the part of any party except that nothing contained in this Section shall relieve any party hereto from any Liability for any breach of a representation, warranty or covenant contained in this Agreement.

ARTICLE X.
MISCELLANEOUS

10.1. Notices. All notices and other communications required or permitted to be made under this Agreement shall be in writing and shall be deemed duly given for all purposes (a) on the date of delivery, if delivered personally or by confirmed telecopier transmission, (b) on the next business day after delivery by a recognized overnight carrier, or (c) on the date of receipt or refusal of delivery, if sent by United States certified mail, return receipt requested, postage prepaid, and addressed as follows (or at such other address as any party shall provide to the other parties by notice given pursuant to this Section 10.1):

If to any Seller Party:

Sara Lee Corporation
3500 Lacey Road
Downers Grove, IL 60015
Attention: General Counsel
Fax No.: 630-598-6951

If to Buyer:

Farmer Bros. Co.
20333 South Normandie Avenue
Torrance, CA 90502
Attention: Chief Executive Officer
Fax No.: (310) 320-2430

With a copy to:

Anglin, Flewelling, Rasmussen, Campbell & Trytten LLP
199 S. Los Robles Avenue, Suite 600
Pasadena, CA 91101
Attention: John M. Anglin, Esq.
Fax No.: (626) 577-7764

10.2. Amendments; Waivers. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and is duly executed, in the case of an amendment, by Buyer and Seller Parties, or, in the case of a waiver, by the party against whom the waiver is to be enforced. No failure or delay by any party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial waiver or exercise thereof preclude the enforcement of any other right, power or privilege.

10.3. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. No party may assign or delegate or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the other party; provided that either party may assign its rights under this Agreement to any Affiliate of such party or any successor or transferee of such party as a result of any business combination (in any or all of which cases such party nonetheless shall remain responsible for the performance of all of its obligations under this Agreement).

10.4. Construction; Interpretation; Certain Terms. The headings contained in this Agreement, the Additional Documents and the schedules and exhibits hereto and thereto are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Article, section, schedule, exhibit, recital and party references are to this Agreement unless otherwise stated; the exhibits and schedules attached hereto are part of this Agreement as if fully set forth herein. All references to singular or plural or masculine or feminine shall include the other as the context may require. The words “hereof,” “herein,” “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular Section or provision of this Agreement, and reference to a particular Section of this Agreement shall include all subsections thereof. No party, nor its counsel, shall be deemed the drafter of this

Agreement for purposes of construing the provisions of this Agreement, and all provisions of this Agreement shall be construed in accordance with their fair meaning, and not strictly for or against any party. The term “including” as used in this Agreement shall mean including, without limitation, and shall not be deemed to indicate an exhaustive enumeration of the items at issue. Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The parties intend that each representation, warranty and covenant contained herein shall have independent significance. If any party has breached any representation, warranty or covenant contained herein in any respect, then subject to Section 8.7(b), the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the party has not breached shall not detract from or mitigate the fact that the party is in breach of the first representation, warranty or covenant.

10.5. Severability. Any term or provision of this Agreement that is or becomes invalid or unenforceable shall be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms or provisions of this Agreement.

10.6. Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document.

10.7. Entire Agreement. This Agreement, together with the Exhibits and Schedules and Additional Documents, constitutes the entire agreement among the parties pertaining to the subject matter hereof and thereof, and supersede all prior and contemporaneous, oral and written, agreements and understandings pertaining thereto.

10.8. Governing Law; Consent to Jurisdiction; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, without giving effect to conflict of law principles. Each party hereto hereby agrees that any proceeding relating to this Agreement, the Additional Documents and the transactions contemplated hereby or thereby shall be brought solely in the state or federal court located in Chicago, Illinois. Each party hereto hereby consents to personal jurisdiction in any such action brought in any such state or federal court, consents to service of process by registered mail made upon such party, waives any objection to venue in any such state or federal court and any claim that any such state or federal court is an inconvenient forum.

10.9. Expenses. Except as otherwise specifically provided in this Agreement, Buyer shall pay all costs and expenses incurred by or on its behalf and Seller shall pay all costs and expenses incurred by or on behalf of Seller Parties.

10.10. Third-Party Beneficiaries. Nothing herein expressed or implied is intended to or shall be construed to confer upon or give any Person, other than the parties hereto and their respective successors and permitted assigns, any rights or remedies under or by reason of this Agreement.

10.11. Knowledge. All references to “knowledge”, or phrases of similar import (such as “known” or “knows”), shall mean the actual (not imputed or implied), conscious knowledge, at the time of execution of this Agreement or Closing, as applicable, by

(a) in the case of Seller: George Michael Knowles, Sally MacDonald, Daniel Hickman, Tom Hayes, Heidi Modaro, Dan Schober and Phil Lawrence; and

(b) in the case of Buyer: Roger M. Laverty III, Drew Webb and John E. Simmons.

10.12. Title; Risk of Loss. Title and risk of loss with respect to the Purchased Assets shall pass to Buyer at the Closing.

10.13. Waivers of Trial by Jury. THE SELLER PARTIES AND BUYER HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER ADDITIONAL DOCUMENTS, AND CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.

ARTICLE XI.

DEFINED TERMS

“Accounting Costs” shall have the meaning set forth in Section 6.4(b).

“Accounting Principles” shall have the meaning set forth in Section 4.6.

“Acquisition” shall mean the acquisition of the Purchased Assets by Buyer pursuant to the terms and conditions of this Agreement.

“Acquisition Proposal” shall have the meaning set forth in Section 6.14.

“Additional Documents” means, collectively, the agreements, certificates, instruments and other documents to be executed and delivered in connection with this Agreement, including the Operational Agreements.

“Adjustment Payment” shall have the meaning set forth in Section 2.6(e).

“Affiliate” means with respect to any Person (a) any Person who, directly or indirectly, controls, or is controlled by or under common control with, the Person in question, or (b) any person who is a director or executive officer of such Person. For purposes of this definition, “control” of a Person shall mean the power, direct or indirect, to vote or direct the voting of fifty percent (50%) or more of the outstanding voting securities of such Person or to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, veto rights or otherwise.

“Agreement” shall have the meaning set forth in the Preamble.

“Applicable Law” means, with respect to any Person, any domestic or foreign, federal, state or local statute, law, constitution, code, edict, proclamation, treaty, ruling, pronouncement, decision, opinion, interpretation, ordinance, rule, regulation, order, writ, injunction, directive, Judgment, permit, license, decree or other requirement issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority applicable to such Person or any of its Affiliates or any of their respective properties, assets, officers, directors, employees, consultants or agents (in connection with such officer’s, director’s, employee’s, consultant’s or agent’s activities on behalf of such Person or any of its Affiliates).

“Approved Location” shall mean (a) in the case of Hired Personnel who were employed at a Transferred Facility immediately prior to Closing, such Transferred Facility at which the Hired Personnel were employed immediately prior to Closing or any other facility of Buyer which is located not more than twenty (20) miles from such Transferred Facility, and (b) in the case of Hired Personnel who, immediately prior to Closing, were not employed at a Transferred Facility, any facility of Buyer which is located not more than twenty (20) miles from the location of the facility of Seller at which such Hired Personnel worked immediately prior to the Closing Date.

“Aramark’s Office Coffee Service Business” means Aramark’s business of supplying offices and businesses with coffee, tea, and related products for on-site consumption at such offices and businesses by employees and visitors. For the avoidance of doubt, Aramark’s Office Coffee Service Business does not include any other parts of Aramark’s business, even those parts that may include the sale of coffee, tea and related products as part of Aramark’s business of managing food service operations in business offices and other locations.

“Assumed Liabilities” shall have the meaning set forth in Section 1.4.

“Assumed Multiemployer Plan” shall have the meaning set forth in Section 6.2(d).

“Authorized Information” shall have the meaning set forth in Section 6.27.

“Bank Financing” means the closing of a loan to Buyer of a principal sum of not less than $20,000,000 substantially on the terms (or better terms) set forth in that certain bank proposal, dated November 13, 2008, delivered by or on behalf of Buyer to Seller.

“Banking Change” shall mean (a) any additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any Governmental Authority or by any national securities exchange, (b) a general banking moratorium shall have been established by Federal, Illinois, Maryland or New York authorities, or (c) a war involving the United States shall have been declared, or any conflict involving the armed forces of the United States shall have escalated, or any other national emergency related to

the effective operation of government or the financial community shall have occurred, which could reasonably be expected to materially and adversely affect the DSD Business.

“Basket” shall have the meaning set forth in Section 8.6(a).

“Books and Records” shall have the meaning set forth in Section 1.1(j).

“Brew Equipment Inventory” means Machines and Spare Parts.

“Business Returns” shall mean all Tax returns required to be filed with respect to the DSD Business other than those consolidated, unitary or combined, Tax returns filed by Seller with respect to both the DSD Business and other businesses owned or operated by Seller and its Affiliates.

“Buyer” shall have the meaning set forth in the Preamble.

“Buyer Co-Pack Agreement” shall have the meaning set forth in Section 3.2(d)(vi).

“Buyer Employee Plans” shall have the meaning set forth in Section 6.2(a).

“Buyer Indemnified Parties” shall have the meaning set forth in Section 8.2.

“Buyer Site(s)” shall mean any plant, warehouse or facility or other location of Buyer to which Seller delivers Consumable Inventory, or to which Consumable Inventory is in transit, at or prior to Closing.

“Buyer Trademark License Agreement” shall have the meaning set forth in Section 3.2(d)(ii).

“Buyer’s Objection” shall have the meaning set forth in Section 2.6(b).

“Cappuccino and Cocoa Transition Agreement” shall have the meaning set forth in Section 3.2(d)(v).

“Changes” shall have the meaning set forth in Section 6.6(a).

“Claim Notice” shall have the meaning set forth in Section 8.4(a).

“Claims” shall have the meaning set forth in Section 4.14.

“Closing” and “Closing Date” shall have the respective meanings set forth in Section 3.1.

“Closing Inventory Statement” shall have the meaning set forth in Section 2.6(a).

“Closing Payment” shall have the meaning set forth in Section 2.1(a).

“Closing Routes” shall have the meaning set forth in Section 4.13(a).

“Closing Statements” shall have the meaning set forth in Section 2.6(a).

“COBRA” shall have the meaning set forth in Section 6.2(c).

“Code” means the Internal Revenue Code of 1986, as amended.

“Coffee Food Service Business” shall mean the sale of coffee, tea and related products to (i) customers who offer or provide (whether pursuant to a sale or otherwise) coffee, tea and related products to consumers only after preparation into a beverage, (ii) customers who distribute coffee, tea and related products only to third parties (who are not consumers) who offer or provide (whether pursuant to a sale or otherwise) such coffee, tea or related products to customers only after preparation into a beverage, (iii) customers engaged in the business of supplying coffee, tea and related products to businesses and other persons and entities who in turn offer or provide (whether pursuant to a sale or otherwise) brewed coffee or tea by the cup (i.e., office coffee supply), (iv) customers who supply or provide coffee, tea or related products only to vending machines, and (v) customers engaged in the business of selling coffee, tea and related products directly to customers other than through a retail establishment.

“Collection Account” shall have the meaning set forth in Section 6.20(a).

“Collection Period” shall have the meaning set forth in Section 6.20(b).

“Confidentiality Agreement” shall have the meaning set forth in Section 6.11(a).

“Confidential Operating Agreement Terms” shall have the meaning set forth in Section 6.11(c).

“Consumable Inventory” shall mean green coffee, tea, spices and other food products, raw materials, work in process, finished goods, packaging, wrapping, supply items, all disposable products (meaning products that are customarily disposed of after their use), and all other similar items, that are classified as inventory consistent with Seller’s customary accounting practices, the Financial Statements and the Historical Financial Statements.

“Contract(s)” shall mean any agreement, contract, license, obligation, promise, understanding, arrangement, commitment or undertaking of any nature that is legally binding, whether oral or written and whether express or implied (other than leases).

“CPA Firm” shall have the meaning set forth in Section 2.6(c).

“Defense Notice” shall have the meaning set forth in Section 8.4(b).

“Dispute Notice” shall have the meaning set forth in Section 8.5.

“DSD Business” means collectively, the DSD Coffee Business and DSD Sauce Business.

“DSD Business Marks” shall have the meaning set forth in Section 1.1(a).

“DSD Business transactions” shall mean transactions reflected on Seller’s books and records as transactions of the DSD Business in a manner consistent with Seller’s past practices.

“DSD Coffee Business” shall mean (i) Seller’s business of manufacturing, processing, packaging, marketing, distributing and selling coffee, tea, and related products in the United States through Seller’s network of Facilities and Vehicles such that the products are delivered by Seller directly to customer locations where such products are consumed, (ii) Seller’s business of selling coffee, tea, and related products in the United States to customers in sales transactions procured by sales personnel employed by the direct store delivery portion of the Sara Lee foodservice business which are reflected in Seller’s books and records as DSD Business transactions, (iii) Seller’s business in the United States of marketing, distributing and selling coffee, tea and related products under the Trade Names “Cain’s” and “McGarvey” to grocers and retailers, (iv) Seller’s business in the United States of marketing, distributing and selling coffee, tea, and related products in the United States through Seller’s network of Facilities and Vehicles to Aramark’s Office Coffee Service Business, but only to the extent that such products are ordered by these entities in connection with their business of supplying other businesses with such products for on-site consumption, (v) the distribution, sale, service and maintenance of Machines in connection with the business activities described in items (i) through (iv), and (vi) any other business which Seller internally designated as part of the United States DSD Coffee Business for the periods covered by the Financial Statements, subject, however, to changes in customers as described in this Agreement. For the avoidance of doubt, the DSD Coffee Business shall not include any part of Seller’s business with Aramark other than Aramark’s Office Coffee Service Business.

“DSD Collection Customers” shall have the meaning set forth in Section 6.20(a).

“DSD Contracts” or shall have the meaning set forth in Section 1.1(g).

“DSD Customers” shall mean the Exclusive Customers and the Shared Customers.

“DSD Employees” means all individuals, including all individuals covered by a Labor Contract, employed by Seller on the applicable date who perform services for, and are considered by Seller as employees of, the DSD Business (including service personnel of Seller assigned to the DSD Business who Buyer has advised Seller that Buyer wishes to hire).

“DSD Intellectual Property” shall have the meaning set forth in Section 1.1(a).

“DSD Sauce Business” shall mean Seller’s business of marketing, distributing and selling (but not manufacturing, processing or packaging) sauces and dressings in the United

States through Seller’s network of Facilities and Vehicles such that the products are delivered or sold by Seller to customers of the DSD Coffee Business.

“Employee Plans” shall have the meaning set forth in Section 4.19(a).

“Environmental Conditions” shall have the meaning set forth in Section 4.21(h).

“Environmental Laws” shall mean all federal, state, and local laws, statutes, regulations, ordinances and other provisions having the force of law, and all judicial and administrative orders concerning pollution or protection of the environment, including without limitation, all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control or cleanup of any Hazardous Substances, as amended and as now or hereafter in effect, including but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et seq.), as amended by the Superfund Amendments and Reauthorization Act of 1986 (“CERCLA”), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Safe Drinking Water Act (42 U.S.C. (S)3808 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), as amended by the Hazardous and Solid Waste Amendments of 1984 (“RCRA”), the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), the Clean Water Act (33 U.S.C. Section 1321 et seq.), and any similar federal, state or local laws, ordinances or regulations implementing such laws.

“Environmental Liability” means any Liability arising from or related to (a) the storage, handling or disposal of any Hazardous Substances from, to, at, in, on or under the Transferred Facilities, or (b) any violation of any Environmental Law with respect to the Transferred Facilities.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliates” means any Person required at any relevant time to be aggregated with any entity related to such Person under Sections 414(b), (c), (m), or (o) of the Code and any related Treasury regulation.

“Estimated Inventory and Prepaid Excess” shall have the meaning set forth in Section 2.1.

“Estimated Inventory and Prepaid Value” shall have the meaning set forth in Section 2.1.

“Estimated Inventory and Prepaid Shortfall” shall have the meaning set forth in Section 2.1.

“Excluded Assets” shall have the meaning set forth in Section 1.3.

“Excluded Liabilities” shall have the meaning set forth in Section 1.5.

“Exclusive Customers” shall mean Seller’s customers who purchase and receive the Products solely through the DSD Business.

“Facilities” shall mean the distribution centers, warehouses and local depots listed on Exhibit A hereof.

“Federal Act” shall have the meaning set forth in Section 4.23.

“Final Closing Statements” shall have the meaning set forth in Section 2.6(d).

“Financial Statements” shall have the meaning set forth in Section 4.6.

“Formula License Agreement” shall have the meaning set forth in Section 3.2(d)(x).

“Governmental Authority” means any foreign, domestic, federal, territorial, state or local governmental authority, tribal authority, quasi-governmental authority, instrumentality, court, government or self-regulatory organization, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing.

“Green Coffee and Tea Purchase Agreement” shall have the meaning set forth in Section 3.2(d)(ix).

“Harahan” shall mean that certain facility located at 11201 Edwards Avenue, Harahan, Louisiana on Exhibit A.

“Hazardous Substance” means any substance regulated under any Environmental Law as a hazardous material, hazardous or toxic waste, or hazardous, toxic or radioactive substance, including, without limitation petroleum or petroleum products.

“Hazardous Substance Release” shall mean and include any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, migrating, leaching, dumping or disposing into the environment or the workplace of any Hazardous Substance, and otherwise as defined in any Environmental Law.

“Hired Personnel” shall have the meaning set forth in Section 6.2(a).

“Historic Inventory Statement” shall have the meaning set forth in Section 2.6(a).

“Historical Financial Statements” shall have the meaning set forth in Section 6.4(a).

“Houston Plant” shall mean those certain parcels of real estate commonly known as 202 and 235 N. Norwood, Houston, TX on Exhibit A.

“Houston Software” shall mean the Business Planning and Control System Software (BPCS) which runs on an AS 400 computer server located at the Houston Plant.

“including” shall have the meaning set forth in Section 10.4.

“Indemnified Party” shall have the meaning set forth in Section 8.4(a).

“Indemnifying Party” shall have the meaning set forth in Section 8.4(a).

“Indemnity Claim” means a claim for Losses, net of any insurance proceeds and Tax benefits recovered or recoverable by the Person(s) seeking indemnification related thereto, asserted pursuant to Article VIII.

“Indemnity Notice” shall have the meaning set forth in Section 8.5.

“Information” shall have the meaning set forth in Section 1.1(j).

“Inventory” shall mean inventory held for sale or distribution to customers and all raw materials, work in process, finished products, wrapping, supply items, packaging items and similar items.

“IRS” shall have the meaning set forth in Section 2.2.

“IT Carve Out” shall have the meaning set forth in Section 6.15.

“IT Carve Out Costs” shall have the meaning set forth in Section 6.15.

“Judgment” shall include any judgment, order, writ, injunction, decree or award of any Governmental Authority.

“Know-how” means specialized, proprietary knowledge (including product knowledge and use and application knowledge), recipes, formulae, product formulations, processes, product designs, specifications, quality control, procedures, manufacturing, engineering and other drawings, computer data bases and software, technology, other intangibles, technical information, safety information, engineering data and design and engineering specifications, research records, market surveys and all promotional literature, customer and supplier lists and similar data.

“knowledge” shall have the meaning as set forth in Section 10.11.

“Labor Contact” shall have the meaning set forth in Section 1.1(g).

“Leased Miscellaneous Vehicles” means the vehicles identified on Schedule 1.1(f) as “Leased Miscellaneous Vehicles”, as such schedule may be amended by Seller to reflect dispositions of any such Vehicles in the ordinary course of the DSD Business, including dispositions as a result of lease terminations, casualties, obsolescence or the like.

“Leased Real Property” shall mean the Transferred Facilities listed in Exhibit A and designated therein as leased by Seller and transferred to Realty, including all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by Realty.

“Leased Route Trucks” means the route trucks identified on Schedule 1.1(f) as “Leased Route Trucks”, as such schedule may be amended by Seller, subject to Section 6.6(b), to reflect dispositions of any such Vehicles in the ordinary course of the DSD Business, including dispositions as a result of lease terminations, casualties, obsolescence or the like.

“Leased Sales Vehicles” means the vehicles identified on Schedule 1.1(f) as “Leased Sales Vehicles”, as such schedule may be amended by Seller to reflect dispositions of any such Vehicles in the ordinary course of the DSD Business, including dispositions as a result of lease terminations, casualties, obsolescence or the like.

“Leased Service Trucks” means the service trucks and other vehicles identified on Schedule 1.1(f) as “Leased Service Trucks”, as such schedule may be amended by Seller, subject to Section 6.6(b), to reflect dispositions of any such Vehicles in the ordinary course of the DSD Business, including dispositions as a result of lease terminations, casualties, obsolescence or the like.

“Leased Vehicles” means the Leased Route Trucks, Leased Sales Vehicles, Leased Service Trucks and Leased Miscellaneous Vehicles.

“Liability” shall mean any obligation or liability (including accounts payable) of any kind or nature, absolute or contingent, known or unknown, liquidated or unliquidated, asserted or unasserted, whether accrued or unaccrued, whether due or to become due and regardless of when or by whom asserted, including any Liability for Taxes.

“Lien” shall have the meaning set forth in Section 1.1.

“Liquid Coffee” shall have the meaning set forth in Section 1.3(b).

“Liquid Coffee Business” shall have the meaning set forth in Section 1.3(b).

“Liquid Coffee Distribution Agreement” shall have the meaning set forth in Section 3.2(d)(viii).

“Losses” shall mean all damages, penalties, interest, fines, costs, amounts paid in settlement, obligations, losses, expenses and fees (including court costs, costs of investigation and reasonable attorneys’ fees and expenses) or other Liabilities relating to any actions (whether in law, equity or in an alternative proceeding), suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, Judgments, orders, decrees or rulings of any nature (whether or not involving a third party claim).

“Machines” means brewed and liquid coffee equipment, including coffee brewers and grinders, cocoa and cappuccino dispensing machines, and similar machines.

“Material Adverse Effect” shall have the meaning set forth in Section 4.8(a).

“Material Contracts” shall have the meaning set forth in Section 4.17(a).

“Mini Basket” shall have the meaning set forth in Section 8.6(a).

“Mixed Use Contracts” shall mean each of the Contracts (other than Purchased Contracts) which are legally binding to which any Seller Party is a party or is bound and which relate not only to the DSD Business, but also to other products or businesses of the Seller Parties, but shall not include any Contracts that are Excluded Assets.

“Moonachie” shall mean that certain facility located at Moonachie, NJ in Exhibit A.

“Multiemployer Plan” shall mean any multiemployer plan as defined in Section 3(37) of ERISA, Section 4001(a)(3) of ERISA or Section 414(f) of the Code.

“Note” shall have the meaning set forth in Section 2.1(b).

“NSO Business” shall mean Seller’s business of manufacturing, processing, packaging, marketing, distributing and selling of coffee, tea and related products through Seller’s national sales organization food service business.

“Oklahoma City Plant” shall mean those certain parcels of real estate commonly known as 1313 N. Broadway Ext., Oklahoma City, OK on Exhibit A.

“Operational Agreements” shall have the meaning set forth in Section 3.2(d).

“Option Agreement” shall have the meaning set forth in Section 3.2(g).

“OSHA” shall have the meaning set forth in Section 4.10(b).

“Other Intellectual Property” means, except for Trademarks, Trade Names and domain names, all of the following that relate exclusively to the DSD Business, wherever such rights exist, including the right to recover for any past infringement: (i) Know-how, but only to the extent used in the United States, (ii) proprietary rights in trade dress and packaging with respect

to the Trademarks and Trade Names set forth on Schedules 1.1(a)-1 and 2, (iii) shop rights; (iv) copyrightable works, registered copyrights, and applications, registrations and renewals in connection therewith, (v) inventions (whether patentable or unpatentable and whether or not reduced to practice) and all improvements thereto, (vi) Patents, (vii) trade secrets, but only to the extent used in the United States, and (viii) all other intellectual property rights of the Seller Parties that relate exclusively to the DSD Business and are used in the United States, but not Seller’s right or license to refer to product as “100% Columbian Coffee”.

“Owned Miscellaneous Vehicles” means the vehicles used exclusively by Hired Personnel who are hired by Buyer at Closing, and all other vehicles owned by Seller and located at the Transferred Facilities at the Closing and not constituting Owned Route Trucks or Owned Service Trucks, as identified on Schedule 4.13-2 as “Owned Miscellaneous Vehicles”, as such schedule may be amended by Seller to reflect dispositions of any such Vehicles in the ordinary course of the DSD Business, including dispositions as a result of casualties, obsolescence or the like.

“Owned Real Property” shall mean the Transferred Facilities listed in Exhibit A and designated as owned by Seller, together with all rights, rights of way, easements, appurtenances, improvements, fixtures, etc. in any manner belonging to, or pertaining to such tract(s) or parcel(s) of land.

“Owned Route Trucks” means the route trucks owned by Seller and identified on Schedule 4.13-2 as “Owned Route Trucks”, as such schedule may be amended by Seller, subject to Section 6.6(b), to reflect dispositions of any such Vehicles in the ordinary course of the DSD Business, including dispositions as a result of casualties, obsolescence or the like.

“Owned Service Trucks” means the service trucks and other vehicles owned by Seller and identified on Schedule 4.13.2 as “Owned Service Trucks”, as such schedule may be amended by Seller, subject to Section 6.6(b), to reflect dispositions of any such Vehicles in the ordinary course of the DSD Business, including dispositions as a result of casualties, obsolescence or the like.

“Owned Vehicles” means the Owned Route Trucks, Owned Service Trucks and Owned Miscellaneous Vehicles.

“Patents” means patents (including all reissues, reexaminations, divisions, continuations, continuations in part, revisions, renewals and extensions thereof), utility models, provisional patent applications, patent applications and patent disclosures.

“Permits” shall mean licenses, permits, franchises, approvals, authorizations, consents, registrations, certificates, variances, or orders of, or filings with, any Governmental Authority, whether federal, state or local, necessary for the past or present conduct of, or relating to the past or present operation of, the DSD Business.

“Permitted Encumbrances” shall mean with respect to each parcel of Owned Real Property: (a) all real estate taxes and assessments, both general and special, not yet due or payable; (b) zoning and building ordinances and subdivision and land use regulations; (c) all instruments recorded in the real estate records of the jurisdiction in which such Real Property is located that affect the status of title to the Owned Real Property; and (d) all matters of survey and all other matters with respect to such Owned Real Property which are set forth on Schedule 7.1(d).

“Permitted Liens” means (i) mechanics’, carriers’, workers’ warehouseman’s, materialman’s, repairman’s, landlords’, or other Liens arising or incurred in the ordinary course of the DSD Business with respect to charges not yet due and payable, (ii) security interests of equipment lessors to evidence title retention; (iii) statutory liens for current Taxes or assessments not yet due or payable, and (iv) with respect to the Owned Real Property only, Permitted Encumbrances.

“Permitted Stipulated Updates” shall have the meaning set forth in Section 6.6(a).

“Person” means any individual, Governmental Authority, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liability company or other legal entity or organization.

“Personal Property Leases” shall have the meaning set forth in Section 1.1(f).

“Prepaid Expenses” shall have the meaning set forth in Section 1.1(m).

“Prepaid Statement” shall have the meaning set forth in Section 2.6(a).

“Prior Customers” shall have the meaning set forth in Section 4.25.

“Product Liability Claim” means Claims against Seller relating to any product of the DSD Business processed, manufactured, marketed, labeled or sold by Seller or any of its Affiliates and alleged to have been defective, or improperly processed, manufactured, marketed, labeled or sold.

“Products” means Seller’s products distributed and sold through the DSD Business including coffee, tea, and related products and sauces and dressings.

“Prohibited Area” shall have the meaning set forth in Section 6.18.

“Prohibited Business” shall have the meaning set forth in Section 6.18.

“Promotional Expenses” shall have the meaning set forth in Section 1.4(e).

“Proprietary Rights” shall mean (i) Patents, (ii) Trademarks, (iii) Trade Names, (iv) Know-how, (v) proprietary rights in trade dress and packaging, (vi) shop rights, (v) copyrightable works, copyrights, and applications, registrations and renewals in connection therewith, (vi) inventions (whether patentable or unpatentable and whether or not reduced to practice) and all improvements thereto, (vii) trade secrets, (viii) websites and domain names, (ix) computer software (including source code, executable code, applets, interfaces, scripts, screen designs, menus and menu structures, design and programming tools, data, databases and related documentation), and (x) all other intellectual property rights of the applicable Person, in each case whether registered or not and in each case wherever such rights exist throughout the world and including the right to recover for any past infringement.

“Purchase Price” shall have the meaning set forth in Section 2.1(a).

“Purchased Assets” shall have the meaning set forth in Section 1.1.

“Purchased Consumable Inventory” shall have the meaning set forth in Section 1.1(d).

“Purchased Contracts” shall have the meaning set forth in Section 1.1(g).

“Qualified Plans” shall have the meaning set forth in Section 4.19(c).

“Real Property Leases” shall mean all leases, subleases, licenses, concessions and other agreements (written or oral), including all amendments, extensions, renewals, guaranties and other agreements with respect thereto, pursuant to which Realty hold any Leased Real Property, including the right to all security deposits and other amounts and instruments deposited by or on behalf of any Seller Party or Realty thereunder.

“Realty” shall have the meaning set forth in the Preamble.

“Release” shall have the meaning set forth in Section 6.8.

“Representatives” shall mean any officer, director, principal, attorney, agent, employee or other representative.

“Retained Names and Marks” shall have the meaning set forth in Section 6.13(a).

“Route Trucks” means Owned Route Trucks and Leased Route Trucks.

“Routes” shall have the meaning set forth in Section 4.13(a).

“St. Louis Park” shall mean that certain facility located at St. Louis Park, MN in Exhibit A.

“Saramar” shall have the meaning set forth in the Preamble.

“Sauce Business” shall mean the business that Richelieu Foods, Inc., acquired from Seller of manufacturing, processing, packaging, marketing, selling, and distributing sauces and dressing (collectively, “Sauces”) (and not for sale through retail channels to end user consumers, whether sauces and dressings are sold individually or as part of any other product manufactured, processed, sold or distributed to retailers for sale to consumers).

“Sauce Supply Agreement” shall mean the agreement with Richelieu Foods, Inc. relating to the supply of sauces and dressings distributed and sold as part of the DSD Sauce Business, and as set forth in Section 3.2(d)(ix).

“Sauces” shall have the meaning set forth in the definition of Sauce Business.

“Schedule” shall mean all schedules attached to the Agreement.

“SEC” means the Securities and Exchange Commission.

“Security Agreement” shall have the meaning set forth in Section 2.1(b).

“Seller” shall have the meaning set forth in the Preamble.

“Seller Co-Pack Agreement” shall have the meaning set forth in Section 3.2(d)(vii).

“Seller Expense Reimbursement” shall have the meaning set forth in Section 2.7(a).

“Seller Indemnified Parties” shall have the meaning set forth in Section 8.3.

“Seller Party” or “Seller Parties” or shall have the meaning set forth in the Preamble.

“Seller Receivables” shall have the meaning set forth in Section 6.20.

“Seller Trademark License Agreement” shall have the meaning set forth in Section 3.2(d)(i).

“Seller Transition Services Agreement” shall have the meaning set forth in Section 3.2(d)(iv).

“Seller’s Promotional Sales” shall have the meaning set forth in Section 2.7(a).

“Service Trucks” means Owned Service Trucks and Leased Service Trucks.

“Severance Plans” shall have the meaning set forth in Section 4.20(d).

“Shared Customers” means the customers of the DSD Business who purchase and receive the Products through both the DSD Business and NSO Business.

“Shared Promotional Expense” shall have the meaning set forth in Section 2.7(a).

“Spare Parts” shall mean all of the spare parts relating to any Machines.

“Tangible P&E” shall have the meaning ascribed to it in Section 1.1(b).

“Tax” or “Taxes” means all taxes imposed of any nature including, without limitation, federal, state, local or foreign income tax, alternative or add-on minimum tax, profits or excess profits tax, franchise tax, gross income, adjusted gross income or gross receipts tax, employment-related tax (including, without limitation, employee withholding or employer payroll tax, FICA or FUTA), real or personal property tax or ad valorem tax, sales or use tax, excise tax, windfall profits tax, customs duties, capital stock tax, transfer tax, registration tax, estimated tax, stamp tax or duty, any withholding or back up withholding tax, value added tax, severance tax, prohibited transaction tax, premiums tax or occupation tax, together with any interest or any penalty, addition to tax or additional amount imposed by any Governmental Authority responsible for the imposition of any such tax, whether disputed or not.

“Taxing Authority” means any Governmental Authority responsible for the imposition of any Tax.

“Third Party Claim” shall have the meaning set forth in Section 8.4(a).

“Title Company” shall have the meaning set forth in Section 7.1(d).

“Title Policy” shall have the meaning set forth in Section 7.1(d).

“Title Report” shall have the meaning set forth in Section 4.10(a).

“Total Promotional Sales” shall have the meaning set forth in Section 2.7(a).

“Trademarks” shall mean trademarks, service marks, brand marks, registrations thereof, pending applications for registration thereof and such unregistered rights with respect thereto which are used in the business of the applicable Person.

“Trade Names” shall mean (i) trade names, (ii) brand names, (iii) product names; and (iv) logos and all other related names and slogans, registrations thereof and such unregulated rights with respect thereto which are used in the business of the applicable Person.

“Transferred Facilities” shall mean the Owned Real Property or Leased Real Property to be transferred to Buyer as designated on Exhibit A.

“Unanticipated Changes” shall have the meaning set forth in Section 6.6(a).

“Vacation Reimbursement” shall have the meaning set forth in Section 6.2(a).

“Valuation Methodology” shall have the meaning set forth in Section 2.6(a).

“Valuation Report Costs” shall have the meaning set forth in Section 6.4(d).

“Vehicles” means the Owned Vehicles and Leased Vehicles.

“WARN Act” shall have the meaning set forth in Section 4.20(c).

“Waiver Request Costs” shall have the meaning set forth in Section 6.4(c).

(SIGNATURES ON NEXT PAGE)

The parties hereto have caused this Asset Purchase Agreement to be duly executed as of the day and year first above written.

	SARA LEE CORPORATION


	By:	/s/ Aaron E. Alt
	Name: Aaron E. Alt
	Title: Senior Vice President

	SARAMAR, LLC


	By:	/s/ Mark S. Silver
	Name: Mark S. Silver
	Title: Vice President and Assistant Secretary

	FARMER BROS. CO.


	By:	/s/ Roger M. Laverty III
	Name: Roger M. Laverty III
	Title: President and Chief Executive Officer

Signature Page of Sara Lee Asset Purchase Agreement

EXHIBIT A

Facilities

EXHIBIT B

Form of Note

EXHIBIT C

Form of Security Agreement

EXHIBIT D

Form of Seller Trademark License Agreement

EXHIBIT E

Form of Buyer Trademark License Agreement

EXHIBIT F

Form of Superior Trademark License Agreement

EXHIBIT G

Form of Seller Transition Services Agreement

EXHIBIT H

Form of Cappuccino and Cocoa Transition Agreement

EXHIBIT I

Form of Buyer Co-Pack

EXHIBIT J

Form of Seller Co-Pack

EXHIBIT K

Form of Liquid Coffee Distribution Agreement

EXHIBIT L

Form of Green Coffee and Tea Purchase Agreement

EXHIBIT M

Form of Formula License Agreement

EXHIBIT N

Form of Foreign Investment in Real Property Tax Act Affidavit

EXHIBIT O

Form of Option Agreement

EXHIBIT P

Historical Financial Statements

Exhibit 10.4

FARMER BROS. CO.

2005 INCENTIVE COMPENSATION PLAN

(Amended and Restated as of December 31, 2008)

1. Purpose. The purpose of this Plan is to further the Company’s profitability by providing an incentive and reward to key management employees of the Company who through industry, ability, teamwork with other key management employees and exceptional service contribute materially to the success of the Company, and by enhancing the Company’s ability to attract and retain in its employ key personnel upon whose efforts the success of the Company is dependent. The Company desires to adopt this Plan to: provide awards based on the achievement of corporate goals and specifically measured individual goals that are consistent with and support the Company’s overall business strategies and objectives; provide Participants with an incentive for excellence in individual performance; and promote teamwork. This Plan entirely supersedes the Company’s 1982 Incentive Compensation Plan (“1982 Plan”).

2. Definitions. As used in this Plan, the following terms shall have the following meanings:

(a) “Plan” means this Farmer Bros. Co. 2005 Incentive Compensation Plan, as it may be amended from time to time.

(b) “Company” means Farmer Bros. Co., a Delaware corporation, and includes the Company’s subsidiaries and divisions.

(d) “Committee” means the Compensation Committee of the Board, or such other committee as may be appointed by the Board to administer the Plan pursuant to section 9.

(e) “Fiscal Year” means the year selected by the Company for income taxation and financial reporting purposes.

(f) “Employee” or “Eligible Employee” means any officer or other key management employee of the Company (including subsidiaries) who is in the employ of the Company. No member of the Committee shall be an Eligible Employee while serving on the Committee or for a period of one year thereafter.

(g) “Participant” means an Eligible Employee to whom an award is made under this Plan.

(h) “Award” means a Current Award or Deferred Award made by the Committee pursuant to section 6 of the Plan.

(i) “Current Award” means an Award payable pursuant to section 7(a) of the Plan.

(j) “Deferred Award” means an Award payable pursuant to section 7(b) of the Plan.

(k) “Base Salary” means a Participant’s annual pay rate at the end of the Fiscal Year, without taking into account the following: (i) any deferrals of income; (ii) any incentive compensation; or (iii) any other benefits paid or provided under any of the Company’s other employee benefit plans.

(l) “Performance Criteria” means the attainment of specified levels of (or percentage changes in) financial performance and other corporate and/or individual objectives as determined by the Committee in its discretion.

(i) Performance Criteria may measure, without limitation, such financial performance indicators as the following: adjusted net income, net sales; total shareholder return; profitability; stock price; economic value added; profit margin (gross or net); asset turnover; sales growth (whether measured in pounds of coffee, number of accounts or otherwise); asset growth; return on investment; earnings per share; return on equity; return on assets; return on capital; operating cash flow; cost of capital; net income; market share; working capital; cost reduction; and such other financial metrics measured solely in terms of the attainment of quantitative targets related to the Company’s business.

(ii) Performance Criteria may also assess, without limitation, attainment of corporate and/or individual objectives such as customer satisfaction, maintenance of good employee relations, safety enhancement, improved product quality, systems improvement and implementation, acquisitions, expansion of product lines, creation of operating efficiencies, market share increase, geographic expansion, enhancement of management depth, succession planning, financial risk management, and such other objectives important to the achievement of the Company’s overall business strategies and objectives.

(iii) Performance Criteria may but need not be susceptible to objective measurement.

Performance Criteria may be applied by the Committee as a measure of the performance of any, all, or any combination of the following: the Company; a subsidiary, division, department, region, function or business unit of the Company or any subsidiary; a particular product category or categories of the Company or any subsidiary; or an individual Participant.

(m) “Target Award” is defined in Section 5.

3. Amount Subject to Awards. The amount available for Awards under this Plan each Fiscal Year shall be within the discretion of the Committee.

4. Participants. Based on its evaluation of an Employee’s performance, contribution to the Company, compensation, and other criteria it deems relevant, the Committee shall determine within ninety (90) days after the beginning of each Fiscal Year, in its sole discretion, the Employees, if any, who shall be Participants in the Plan for that year.

5. Performance Criteria and Target Award. With respect to each Participant, the Committee shall establish in writing the specific Performance Criteria for such Fiscal Year to be achieved by the Company and/or such Participant in order for such Participant to earn an Award under this Plan. The Committee shall also establish a target Award amount (“Target Award”) for each

Participant based upon the Participant’s past annual compensation, current salary, job responsibilities and past and expected future job performance. The Committee may consult with senior management executives of the Company and the Plan Participants in establishing such Performance Criteria and Target Awards to the extent deemed appropriate by the Committee. Performance Criteria may vary from Participant to Participant and between groups of Participants. The Committee shall for each Fiscal Year establish a formula or matrix for each Participant pursuant to which his or her Award shall be determined based upon the degree of achievement of such Performance Criteria. This formula or matrix may take into account Performance Criteria achieved in prior Fiscal Years. In addition, the relative weight among specific Performance Criteria shall be determined by the Committee in its discretion. The Committee shall inform each Participant of the Performance Criteria, Target Award and formula or matrix for determining achievement of the Performance Criteria and calculation of the Award which are applicable to the Participant’s Award. The Committee shall have the discretion at any time to add additional Performance Criteria and to modify any objectives or performance levels designated in relation to previously established Performance Criteria. The Performance Criteria for each Participant, once established, shall continue for subsequent Fiscal Years unless modified by the Committee. Depending on the level of achievement of applicable Performance Criteria, a Participant’s actual Award can exceed his or her Target Award.

6. Determination of Awards.

After the end of each Fiscal Year and promptly upon availability of the Company’s audited financial statements, the Committee shall review and evaluate the Performance Criteria applicable to the Fiscal Year for each Participant in light of the Company’s and/or such Participant’s performance measured in accordance with such criteria, and shall determine whether and to what extent the Performance Criteria have been satisfied and the amount of the Award, if any, to be made to the Plan Participant. The executive officers of the Company shall provide all information necessary to enable the Committee to make the determination promptly following fiscal year-end. The Committee may in its discretion consult with such Participant’s immediate supervisor (i.e., responsible Vice President and/or the President and CEO) with respect to whether any Performance Criteria measured by such Participant’s individual performance have been achieved. Achievement of financial Performance Criteria shall be determined by adding back any past or current Award made under the Plan or any award under the 1982 Plan which otherwise would affect the result unless the Committee determines otherwise. If a Performance Criterion is not susceptible to objective measurement, the Committee shall determine the level of attainment in good faith on a subjective basis. Payment of Awards, less withholding taxes, shall be made to Participants as provided in section 7, but only upon the Committee’s certification that the applicable Performance Criteria have been satisfied and upon determination of the amount of each Award. No Award shall be deemed to be earned under the Plan prior to the Committee’s certification and Award determination.

Notwithstanding anything contained in this Plan to the contrary and regardless of whether any or all of the Performance Criteria have been achieved, whether in whole or in part, the Committee may in its discretion eliminate entirely, reduce, or increase any Award to a Participant in order to reflect additional considerations relating to the Company and/or such Participant’s individual performance. In determining whether an Award will be, eliminated, reduced or increased, the Committee shall consider any changes in circumstances which may

have occurred during the Fiscal Year, including, without limitation, changes in accounting practices or applicable law, extraordinary items of gain or loss, discontinued operations, restructuring costs, sales or dispositions of assets and acquisitions, and such Participant’s individual performance. Any action by the Committee under this paragraph shall be conclusive and binding on the Company and the Participant.

7. Payment of Awards.

(a) Current Awards. Current Awards for a Fiscal Year shall be paid in a lump sum as soon as practicable after the Committee’s determination pursuant to Section 6 and in all events not later than the December 31 that follows the end of such Fiscal Year.

(b) Deferred Awards. Prior to the beginning of any Fiscal Year, the Committee may, in its sole discretion, allow Participants to elect to defer payment of any Award they may receive with respect to that Fiscal Year beyond the date such Award would be paid pursuant to Section 7(a) but for such deferral election. Any such deferral election shall be made in a form and manner prescribed by the Committee, shall be filed with the Committee no later than the last day of the Fiscal Year that proceeds the Fiscal Year to which the Award relates (or such earlier deadline as may be prescribed by the Committee). Any such deferral of payment must comply with any applicable requirements of Section 409A of the U.S. Internal Revenue Code.

8. Designation of Beneficiaries.

Each Participant shall file with the Committee a written designation of the person or persons who shall be entitled to receive any amounts payable under this Plan after the Participant’s death. The Participant may designate natural persons, charitable institutions, trusts, or the Participant’s estate as beneficiaries. A Participant may name one or more contingent beneficiaries. Unless otherwise designated by a Participant, payments shall be divided equally among co-beneficiaries. A Participant may from time to time revoke or change a beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Committee. The last such designation received by the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant’s death, and in no event shall it be effective as of a date prior to such receipt.

If no such beneficiary designation is in effect at the time of a Participant’s death, or if no designated beneficiary survives the Participant, or if such designation conflicts with law, the payment of the amount, if any, payable under the Plan after his death shall be made to the Participant’s estate. If the Committee is in doubt as to the right of any person to receive such amount, the Committee may retain such amount, without liability for any interest thereon, until the rights thereon are determined, or the Committee may pay such amount into any court of appropriate jurisdiction and such payment shall be a complete discharge of the liability of the Plan, the Company and the Committee therefor.

9. Administration.

The Plan shall be administered by the Compensation Committee of the Board of Directors or such other committee as may be appointed by the Board of Directors. The

Committee shall have full power and authority to construe, interpret and administer the Plan. All decisions, actions or interpretations of the Committee shall be final, conclusive and binding upon all parties unless overruled by the Board of Directors.

The Committee shall consist of two or more members, each of whom shall be appointed by, shall remain in office at the will of, and may be removed, with or with cause by the Board of Directors. Any member of the Committee may resign at any time. No member of the Committee shall be entitled to act on or decide any matter relating solely to himself or any of his rights or benefits under the Plan. No member of the Committee shall be entitled to receive an Award under this Plan while serving on the Committee or within one year thereafter. The members of the Committee shall not receive any special compensation for serving in their capacities as members of the Committee. No bond or other security need be required of the Committee or any member thereof in any jurisdiction.

The procedures for the proceedings of the Committee shall be established by resolution of the Board of Directors, absent which resolution the procedures applicable under the Company’s Bylaws to proceedings of the Board of Directors shall apply to the proceedings of the Committee.

No member of the Committee shall be personally liable by reason of any contract or other instrument executed by him or his behalf in his capacity as a member of the Committee nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other officer, employee or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been delegated, to the fullest extent permissible under the California General Corporation Law.

10. Amendment or Termination. The Board of Directors reserves the right at any time to amend, suspend, or terminate the Plan in whole or in part and for any reason without the consent of any Participant or beneficiary; provided that no such action shall adversely affect the rights of Participants or beneficiaries with respect to Awards made prior to such action. Subject to the foregoing provision, any amendment, modification, suspension, or termination of any provisions of the Plan may be retroactively applied.

11. General Provisions.

Nothing contained in the Plan shall give any Employee the right to be retained in the employ of the Company or affect the right of the Company to dismiss any Employee. The adoption of the Plan or designation of an Eligible Employee as a Plan Participant shall not create a right in any Employee to receive an Award under the Plan. No Award under the Plan shall be considered as compensation under any employee benefit plan of the Company except as otherwise determined by the Committee.

If the Committee shall find that any person to whom any amount is payable under the Plan is unable to care for his affairs because of illness or accident, or is a minor, or is under any other disability, then any payment due him (unless a prior claim therefore has been made by a duly appointed legal representative), may, if the Committee so directs the Company, be paid to

his spouse, a child, a relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Plan, the Company, and the Committee therefor.

Except insofar as may otherwise be required by law, no amount payable at any time under the Plan shall be subject in any manner to alienation by anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge, or encumbrance of any kind nor in any manner be subject to the debts or liabilities of any person and any attempt to so alienate or subject any such amount, whether presently or thereafter payable, shall be void. If any person shall attempt to, or shall, alienate, sell, transfer, assign, pledge, attach, charge, or otherwise encumber any amount payable under the Plan, or any part thereof, or if by reason of his bankruptcy or other event happening at any such time such amount would be made subject to his debts or liabilities or would otherwise not be enjoyed by him, then the Committee, if it so elects, may direct that such amount be withheld and that the same or any part thereof be paid or applied to or for the benefit of such person, his spouse, children or other dependents, or any of them, in such manner and proportion as the Committee may deem proper.

The Participant shall have no right, title or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations hereunder. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship, joint venture or partnership between the Company and the Employee or any other person. To the extent that any person acquires a right to receive payments from the Company under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid in cash from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payments of such amounts.

All Deferred Awards under the Plan constitute unfunded deferred compensation arrangements for a select group of key management personnel and all rights thereunder shall be governed by and construed in accordance with the laws of California.

The Committee shall make such adjustments as it deems equitable in the event the Company changes its fiscal year.

12. Effective Date of the Plan. This Plan shall be effective for Awards made for the Fiscal Year ending June 30, 2006. Awards made for any prior Fiscal Year shall be governed by the 1982 Plan.

Exhibit 10.6

ESOP LOAN AGREEMENT NO. 2

This ESOP Loan Agreement No. 2 (the “Second Agreement”) dated as of July 21, 2003 is entered into by and between FARMER BROS. CO., a California corporation (“Lender”), and WELLS FARGO BANK, N.A., (the “Trustee”) as trustee for the FARMER BROS. CO. EMPLOYEE STOCK OWNERSHIP PLAN (the “Borrower” or the “ESOP”).

RECITALS

A. The Lender has adopted an employee stock ownership plan to purchase and hold FARMER BROS. CO. stock on behalf of the eligible employees of Lender. The ESOP is intended to qualify as an employee stock ownership plan under section 4975(c)(7) of the Internal Revenue Code of 1986, as amended (the “Code”), and Section 407(d)(6) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The ESOP provides that the ESOP may obtain loans to purchase shares of Lender’s stock. It is intended that loans made under this Agreement shall qualify for an exemption under Section 4975(d) of the Code from being a prohibited transaction under Section 4975(c) of the Code.

B. Pursuant to the ESOP Loan Agreement dated March 28, 2000 as amended by Amendment No. 1 to ESOP Loan Agreement (“First Agreement”), as of the date hereof the ESOP has acquired 170,426 shares of the 300,000 shares of the Company’s common stock for which a loan was authorized by the First Agreement.

C. The provisions for loan advances under the First Agreement expired on July 31, 2003.

D. On July 21, 2003 Lender’s Board of Directors authorized a loan to the ESOP, without limitation as to amount, to purchase the remainder (129,574 shares) of the 300,000 originally authorized. Such remaining shares are called “Shares” herein.

E. The ESOP Plan Committee by action dated October 6, 2003 has authorized the execution of the Second Agreement.

ARTICLE 1: The ESOP Loan

1.1 Subject to the terms set forth herein, the Lender agrees to lend to the Borrower the Principal Amount, or such portion of the Principal Amount as the Borrower elects to receive from time to time under Section 1.2 of this Second Agreement (the “Loan”).

1.2 During the period commencing with the date hereof and ending on July 31, 2005, the Borrower may elect from time to time to receive from Lender an advance (an “Advance”). Amounts Advanced and repaid may be reborrowed prior to July 31, 2005. An election to receive an Advance shall be made by the Borrower in writing to the Lender and shall specify the amount of the Advance requested and the date on which the Borrower requests that such funds be made available. Such date shall be no less than three business days prior to the date the notice of such election is received by the Lender, unless the Lender in its sole discretion waives such requirement.

1.3 The Borrower hereby agrees that it will use the entire proceeds of each Advance within a reasonable time after receipt to acquire Shares through open market purchases or from the Lender or any shareholder of Lender. If for any reason such purchases cannot be effected within a reasonable time, the Borrower must make a principal prepayment of the Loan with all such unused proceeds.

1.4 Borrower’s indebtedness is evidenced by a Promissory Note of even date (the “Note”) in the form attached hereto as Exhibit “A”. The Lender shall

enter upon the schedule attached to the Note the date and principal amount of each Advance.

1.5 Interest shall accrue on the balance of unpaid principal from the date of each Advance until the payment due date as described in the Note.

1.6 To secure payment of the Promissory Note, Borrower grants Lender a security interest in the Shares purchased with the loan proceeds under the ESOP Pledge Agreement attached hereto as Exhibit “B”.

1.7 The Borrower shall make principal and interest payments to the Lender according to the terms of the Note. The date and amount of each payment, principal or interest, shall be entered on the schedule to the Note.

1.8 The Lender agrees to make contributions to the ESOP in cash or by cancellation of indebtedness from time to time and in amounts sufficient to permit the Borrower to make timely repayments of principal and interest due under the terms of the Note. Subject to the preceding sentence, the amount and timing of such contribution(s) shall be at the sole discretion of the Lender, after considering the amount of each annual payment of principal and interest, the amount of any cash dividends received by the ESOP on Lender’s stock and the amount, if any, of non-Lender investments held by the ESOP. The Lender shall not be required to make contributions to the ESOP in amounts in excess of the limitations under Sections 404(a) and 415 (c) of the Code. The Borrower agrees that so long as any interest or principal amount remains payable on the Loan, Borrower will use all cash contributions, earnings thereon and cash dividends received by the ESOP to make payments on the Loan. Borrower’s obligation to make payments on the Loan is limited to the excess of the aggregate of such contributions, earnings and dividends over prior Loan payments. Lender shall have no recourse against Borrower’s assets other than such excess contributions, earnings and dividends and the Shares then pledged under the ESOP Pledge Agreement.

1.9 The Borrower may prepay principal or interest without premium or penalty, any such prepayment shall be applied to the principal installments in the inverse order of maturities.

1.10 The ESOP may elect to apply the proceeds from the sale of any Shares remaining subject to pledge to pay principal and interest due on the Loan in the event of the termination of the ESOP or if the ESOP ceases to be an employee stock ownership plan under Section 4975(e)(7) of the Code.

ARTICLE 2: The Borrower Represents And Warrants As Follows:

2.1 The Borrower has duly authorized the execution, delivery and performance of this Agreement, the Note and the ESOP Pledge Agreement and any other documents in connection with the Loan. These documents that have been or will be executed and delivered pursuant to this Agreement constitute valid, binding obligations of the ESOP, each enforceable according to its terms.

2.2 The Borrower is an employee stock ownership plan established by the Lender and has all requisite power and authority, as described in the ESOP plan document, to execute, deliver and perform its obligations under this Agreement.

2.3 All of the proceeds of the Loan will be used by the Trustee to purchase for the ESOP shares of “employer securities” as defined in Section 409(l) of the Code, subject to Section1.3 above.

2.4 This Agreement is executed by Wells Fargo Bank, N.A. solely in its capacity as Trustee of the Farmer Bros. Co. Employee Stock Ownership Plan pursuant to directions from the ESOP.

ARTICLE 3: The Lender Represents And Warrants As Follows:

3.1 The Lender is a corporation duly incorporated and validly existing and in good standing under the laws of the State of California.

3.2 The Lender has all requisite power and authority to deliver and perform its obligations under this Agreement. The Lender has taken all corporate action to establish the ESOP and to authorize this Agreement. This Agreement has been duly executed and delivered by the Lender and is a legal, valid and binding obligation of the Lender.

3.3 Neither the execution of this Agreement nor the fulfillment of any of the Lender’s obligations under this Agreement will conflict with or result in a breach or violation of or constitute any default under any known rule, law, regulation, order contract or agreement of the Lender.

ARTICLE 4: Miscellaneous

4.1 No amendment or waiver of any provision of the Agreement shall be effective unless set forth in an instrument in writing and signed by both parties to this Agreement.

4.2 No delay or omission of Lender in exercising any right or remedy under this Agreement shall impair such right or remedy or be construed to be a waiver of any default of an acquiescence therein, and any single or partial exercise of any such right or remedy shall not preclude other or further exercise thereof or the exercise of any other right or remedy; and no waiver, amendment or other variation of the terms, conditions or provisions of this Agreement whatsoever shall be valid unless in writing signed by the Lender, and then only to the extend such writing specifically set forth. All rights and remedies described in this Agreement, the Note or other Loan documents shall be cumulative and all shall be available to the Lender until all terms and conditions of the debt have been satisfied.

4.3 This instrument, including the Exhibits hereto, is the entire agreement between the parties hereto with respect to the loan and all representations, warranties, agreements or undertakings heretofore or contemporaneously made, which are not set forth herein, are superceded hereby.

4.4 This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors or assigns.

4.5 Any notice, consent, approval or directions required or permitted to be given hereunder shall be in writing and shall be deemed duly given and received upon personal delivery to the addressee stated below or if mailed, forty-eight (48) hours after deposit in the United States Mail, first class postage and addressed as required below:

“LENDER”

Treasurer’s Office

Farmer Bros. Co.

20333 South Normandie Avenue

Torrance, CA 90502

“BORROWER”

Administrative Committee

Farmer Bros. Co. Employee Stock Ownership Plan

20333 South Normandie Avenue

Torrance, CA 90502

With a copy to “TRUSTEE”

Wells Fargo Bank, N.A.

Employee Benefit Trust

707 Wilshire Boulevard

Los Angeles, CA 90017

4.6 All Exhibits are incorporated herein.

4.7 The Trustee’s personal assets shall not be liable for any act or omission of the Trustee except in the case of gross negligence or willful misconduct.

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

“LENDER”

Farmer Bros. Co.

By:	/s/Roy E. Farmer
Roy E. Farmer, President

By:		/s/John E. Simmons
John E. Simmons, Treasurer

“BORROWER”
Farmer Bros. Co. Employee Stock Ownership Plan
by Wells Fargo Bank, N.A., Trustee


By:		/s/ E. Pigott
Title:				Vice President

By:		/s/ E.L. Yeany
Title:			Vice President

PROMISSORY NOTE

For value received, the FARMER BROS. CO. EMPLOYEE STOCK OWNERSHIP PLAN (“Borrower’) promises to pay to the order of FARMER BROS. CO., a California corporation (“Lender”), at 20333 South Normandie Avenue, Torrance, California or at such other place as the holder of this Note may designate, such amount as has been advanced by Lender as may be set forth on the attached schedule (the “Schedule”), with interest thereon as follows:

Each advance shall bear interest from the date made at the interest rate then applicable under this Note. The interest rate shall be an annual rate equal to 1.5% per annum over the “90-day Commercial Paper Rate” determined initially on the date of the first advance and thereafter adjusted quarterly on the first business day of each calendar quarter. The 90-day Commercial Paper Rate is the United States commercial paper rate for said number of days as last published in The Wall Street Journal as of the date of the first advance or as of an adjustment date, as applicable. Interest shall be computed and paid on the basis of a 360-day year for the actual number of days elapsed. Unpaid interest shall bear interest as principal.

Principal is payable in annual installments on December 15 of each year beginning December 15, 2003 in an amount equal to the unpaid principal balance divided by the number of years remaining until maturity of this Note on

December 15, 2018 when the entire unpaid principal balance shall be due and payable. Interest on unpaid principal shall be paid annually on December 15 concurrently with principal installments.

Payments shall be applied first to interest then accrued and the remainder to principal whereupon interest shall cease on principal so paid. Principal and interest shall be payable in lawful money of the United States of America.

This Note evidences the indebtedness incurred by Borrower to the Lender under the ESOP Loan Agreement No. 2 dated as of July 21, 2003 by and between the Borrower and the Lender (the “Agreement”) the terms of which are made a part hereof.

This Note may be prepaid in whole or in part at any time, without premium or penalty. Partial prepayments shall be applied in inverse order of maturity.

Except as otherwise provided in the Agreement, payments of principal and interest hereunder shall be made by the Borrower only from cash contributions (or contributions in the form of cancellation of indebtedness), from any earnings attributable to such contributions and from any cash dividends paid on the shares of FARMER BROS. CO. common stock purchased with the proceeds of the loan evidenced hereby. Lender’s recourse is limited as provided in Section 1.8 of the Agreement.

This Note is not subject to acceleration. In the event of default in payment of any installment of principal or interest due under this Note (which will not be deemed to have occurred if such default occurs as a result of a default by Lender under Section 1.8 of the Agreement), the liability of Borrower is limited to the amount of such installment.

This Note is collateralized by a pledge of stock under an ESOP Pledge Agreement of even date herewith.

This Note is governed by the laws of the State of California, except to the extent preempted by federal laws.

Dated: July 21, 2003	Farmer Bros. Co. Employee Stock Ownership Plan

		by Wells Fargo Bank, N.A,. as Trustee


		By:
		Title:

		By:
		Title:

SCHEDULE TO PROMISSORY NOTE

	Amount of	Amount of Repayment		Unpaid
Date	Borrowing	Principal	Interest	Principal Balance

ESOP PLEDGE AGREEMENT

This ESOP Pledge Agreement (the “Pledge Agreement”) dated as of July 21, 2003 is entered into by and between FARMER BROS. CO., a California corporation (the “Lender”) and the FARMER BROS. CO. EMPLOYEE STOCK OWNERSHIP PLAN (the “Borrower” or the “ESOP”) and WELLS FARGO BANK, N.A. (the “Pledge Holder”).

In accordance with the terms and conditions of the ESOP Loan Agreement No. 2 dated as of July 21, 2003 (the “Agreement) and the Promissory Note (the “Note”) of even date herewith, the Borrower desires to purchase securities with the proceeds of loan advances from the Lender (the “Loan”). Under the Agreement, Borrower agrees to borrow and Lender agrees to lend funds to enable the ESOP to purchase up to 129,574 shares of the Company’s common stock (“Shares”) over and above the 170,426 shares purchased under the original ESOP Loan Agreed dated March 28, 2000.

In consideration of Lender making loan advances to Borrower for purchase of Shares, and as security for the Note and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Borrower hereby pledges and grants to lender a first priority security interest in all Shares now or hereafter acquired by Borrower with Loan proceeds as continuing security for the full performance and payment of the Secured Obligation. Borrower transfers to the Lender all of Borrower’s right, title and interest in and to the pledged Shares, to be held in the physical possession of the Pledge Holder upon the terms and conditions set forth in this Agreement.

The Secured Obligation consists of payment of all of Borrower’s indebtedness to Lender Note and all renewals, extensions, modifications and novations thereof.

1. Until this Agreement is termination, Borrower shall:

1.1 Deliver to Pledge Holder all Shares purchased with Loan proceeds.

1.2 Not create, incur or suffer to exist any lien, encumbrance or security interest against the Shares except the security interest created by this Pledge Agreement.

2. Lender agrees as follows:

2.1 Except upon the occurrence of an Event of Default, as defined below, Lender shall not sell, exchange or otherwise dispose of any of the Shares without the prior consent of the Borrower, which shall not be withheld unreasonably.

2.2 Within ten (10) days after each payment of principal under the Loan, Lender shall cause the Pledge Holder to release a number of the Shares held hereunder. The number of Shares to be released shall be calculated by multiplying the number of Shares held by the Pledge Holder immediately before the release by a fraction the numerator of which is the amount of the latest principal and interest payment and denominator of which is the sum of the numerator and the remaining unpaid principal and interest payments of the Loan.

3. So long as no Event of Default, as defined below, has occurred and is continuing:

3.1 Borrower shall have the right to vote the Shares, grant or withhold consent, or exercise any other right or privilege with respect to the Shares allowed under Article 8 of the FARMER BROS. CO. EMPLOYEE STOCK OWNERSHIP PLAN (the “Plan Document”).

4. The Pledge Holder agrees as follows:

4.1 Lender hereby appoints WELLS FARGO BANK, N.A., to act as Pledge Holder and Pledge Holder accepts such appointment.

4.2 Borrower will deliver to the Pledge Holder the Shares acquired with the proceeds of the Loan advances.

4.3 The Shares will be held in a segregated account by the Pledge Holder for the benefit of the Lender in accordance with the terms and conditions of this Pledge Agreement.

4.4 The Pledge Holder shall release from the pledge the number of Shares required by Section 2.2.

4.5 The Lender may remove the Pledge Holder and substitute another entity or person to function as Pledge Holder. Upon receipt by a Pledge Holder of any such notice of removal and substitution, said Pledge Holder shall transfer to the successor Pledge Holder Shares, documents of title, and related books and records.

5. Event of Default:

5.1 If the Borrower fails to make any installment of principal or interest due under the Note within ten (10) days after receipt of written notice of non- payment from Lender, an Event of Default shall have occurred.

6. Upon Occurrence of an Event of Default:

6.1 Lender shall have all rights and remedies afforded a secured party and all other rights and remedies available under applicable law, all of which shall

be cumulative, but subject to all limitations set forth herein, or in the Agreement, or Note, or under Section 4975 of the Internal Revenue Code of 1986, as amended, or under the Employee Retirement Income Security Act of 1974, as amended.

6.2 The Lender shall have the right at any time after the occurrence of an Event of Default to repurchase, sell or otherwise convert to cash all or any portion of the Shares remaining subject to pledge, provided that such Shares may be so applied only in an amount necessary to cure the Event of Default. The proceeds of any sale of Shares shall be applied first to the payment of the Lender’s reasonable expenses incurred in effecting such sale or other disposition, including but not limited to attorneys’ fees, and thereafter to Borrower’s liabilities under the Note, Any surplus remaining with the Lender after payment of such expenses and liabilities shall be returned to the Borrower.

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

	“PLEDGEE”

	FARMER BROS. CO., a California corporation

	By:	/s/Roy E. Farmer
		Roy E. Farmer, President

	By:	/s/John E. Simmons
		John E. Simmons, Treasurer

	“PLEDGOR”

FARMER BROS. CO. EMPLOYEE STOCK OWNERSHIP PLAN
by WELLS FARGO BANK, N.A., as Trustee

By:
Title:

By:
Title:

“PLEDGE HOLDER”

WELLS FARGO BANK, N.A.

By:
Title:

By:
Title:

Exhibit 10.10

FORM OF AMENDMENT NO. 1
to
CHANGE IN CONTROL SEVERANCE AGREEMENT

FOR EXECUTIVE OFFICERS

THIS AMENDMENT NO. 1 TO CHANGE IN CONTROL SEVERANCE AGREEMENT (this “Amendment”) is dated as of December 31, 2008, by and between Farmer Bros. Co., a Delaware corporation (the “Company”), and [ ] (the “Executive”).

WHEREAS, the Executive and the Company are parties to that certain Change in Control Severance Agreement for Executive Officers, dated as of [ , 200 ] (the “Agreement”); and

WHEREAS, the Executive and the Company desire to amend the Agreement, as provided herein, to incorporate certain changes deemed advisable in light of Section 409A of the U.S. Internal Revenue Code.

NOW, THEREFORE, the parties agree as follows:

1. Section 2(j) of the Agreement is hereby amended and restated to read in its entirety as follows:

“(j) Involuntary Termination shall mean a termination of the Executive’s employment by the Company that occurs for reasons other than for Cause, Disability or death.”

2. Section 2(m) of the Agreement is hereby amended and restated to read in its entirety as follows:

“(m) Resignation for Good Reason shall mean a termination of the Executive’s employment by the Executive due to:

(i) a significant reduction of the Executive’s responsibilities, duties or authority;

(ii) a material reduction in the Executive’s Base Salary; or

(iii) a Company-required material relocation of the Executive’s principal place of employment;

provided, however, that any such condition shall not constitute “Good Reason” unless both (x) the Executive provides written notice to the Company describing the condition claimed to constitute Good Reason in reasonable detail within ninety (90) days of the initial existence of such condition, and (y) the Company fails to remedy such condition within thirty (30) days of receiving such written notice thereof; and provided, further, that in all events the termination of the Executive’s employment with the Company shall not be treated as a termination for “Good Reason” unless such termination occurs not more than one (1) year

following the initial existence of the condition claimed to constitute “Good Reason.” ”

3. Section 3(b) of the Agreement is hereby amended and restated to read in its entirety as follows:

“(b) A Threatened Change in Control occurs and the Executive’s employment is Involuntarily Terminated or terminated by Resignation for Good Reason during the Threatened Change in Control Period.”

4. Section 4(a) of the Agreement is hereby amended and restated to read in its entirety as follows:

“(a) The Executive will receive as severance an amount equal to his Base Salary at the rate in effect on the date of termination for a period of twenty-four (24) months, such payment to be made in installments in accordance with the Company’s standard payroll practices, such installments to commence, subject to Section 9(j)(ii), in the month following the month in which the Executive’s Separation from Service occurs. The Executive shall also receive a payment equal to one hundred percent (100%) of the Executive’s target Bonus for the fiscal year in which the date of termination occurs (or, if no target Bonus has been assigned to the Executive as of the date of termination, the average Bonus paid by the Company to the Executive for the last three (3) completed fiscal years prior to the termination date), such payment to be made, subject to Section 9(j)(ii), in a lump sum within thirty (30) days after the end of the Company’s fiscal year in which the Executive’s date of termination occurs. As used herein, a “Separation from Service” occurs when the Executive dies, retires, or otherwise has a termination of employment with the Company that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder.”

5. A new Section 9(j) is hereby added to the Agreement to read in its entirety as follows:

“(j) Section 409A.

(i) It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“Code Section 409A”) so as not to subject the Executive to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to the Executive.

(ii) Notwithstanding any provision of this Agreement to the contrary, if the Executive is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of the Executive’s

Separation from Service, the Executive shall not be entitled to any payment or benefit pursuant to Section 4 until the earlier of (i) the date which is six (6) months after the Executive’s Separation from Service for any reason other than death, or (ii) the date of the Executive’s death. Any amounts otherwise payable to the Executive upon or in the six (6) month period following the Executive’s Separation from Service that are not so paid by reason of this Section 9(j)(ii) shall be paid (without interest) as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after the Executive’s Separation from Service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of the Executive’s death). The provisions of this Section 9(j)(ii) shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Code Section 409A.

(iii) To the extent that any benefits or reimbursements pursuant to Section 4(c) or Section 4(d) are taxable to the Executive, any reimbursement payment due to the Executive pursuant to any such provision shall be paid to the Executive on or before the last day of the Executive’s taxable year following the taxable year in which the related expense was incurred. The benefits and reimbursements pursuant to such provisions are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that the Executive receives in one taxable year shall not affect the amount of such benefits or reimbursements that the Executive receives in any other taxable year.”

6. Except as expressly modified herein, the Agreement shall remain in full force and effect in accordance with its original terms.

7. Capitalized terms that are not defined herein shall have the meanings ascribed to them in the Agreement.

8. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered on the day and year first above written.

	FARMER BROS. CO.


	By:
		[Name]
		[Title]


	EXECUTIVE


	[Name]

Exhibit 10.13

AMENDMENT NO. 2
to
EMPLOYMENT AGREEMENT

THIS AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT (this “Amendment”) is dated as of December 31, 2008, by and between Farmer Bros. Co., a Delaware corporation (the “Company”), and Roger M. Laverty III (“Laverty”).

WHEREAS, Laverty is currently employed by the Company pursuant to that certain Employment Agreement, dated as of June 2, 2006 and subsequently amended as of December 6, 2007 (the “Agreement”); and

WHEREAS, the Company and Laverty desire to amend the Agreement, as provided herein, to incorporate certain changes deemed advisable in light of Section 409A of the U.S. Internal Revenue Code.

NOW, THEREFORE, the parties agree as follows:

1. The last paragraph of Section 7B of the Agreement is hereby amended and restated to read in its entirety as follows:

“ “Good Reason” shall consist only of (i) the Company’s material breach of this Agreement, (ii) a material reduction in Laverty’s responsibilities, duties or authority, or (iii) a material relocation of Laverty’s principal place of employment more than fifty (50) miles from its present location; provided, however, that any such condition shall not constitute “Good Reason” unless both (x) Laverty provides written notice to the Company describing the condition claimed to constitute Good Reason in reasonable detail within ninety (90) days of the initial existence of such condition, and (y) the Company fails to remedy such condition within thirty (30) days of receiving such written notice thereof; and provided, further, that in all events the termination of Laverty’s employment with the Company shall not be treated as a termination for “Good Reason” unless such termination occurs not more than one (1) year following the initial existence of the condition claimed to constitute “Good Reason.” ”

2. Section 8B of the Agreement is hereby amended and restated to read in its entirety as follows:

“B. If termination occurs at the election of the Company without Cause or by Laverty’s resignation with Good Reason: Laverty will receive as severance (i) an amount equal to his base salary at the rate in effect on the date of termination for a period of one (1) year, (ii) 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) an amount equal to one hundred percent (100%) of Laverty’s Target Award for the fiscal year in which the date of termination occurs (or, if no Target Award has been assigned to Laverty as of the date of termination, the average bonus paid by the Company to Laverty for the last three (3)

completed fiscal years or for the number of completed fiscal years that Laverty has been in the employ of the Company if fewer than three, prior to the termination date), such amount to be prorated for the partial fiscal year in which the termination occurs. Laverty is not 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. Subject to Section 8C and Section 12K(ii), the amount referred to in clause (i) above shall be paid in installments in accordance with the Company’s standard payroll practices commencing in the month following the month in which Laverty’s Separation from Service occurs, and the amount referred to in clause (iii) above shall be paid in a lump sum within thirty (30) days after the end of the Company’s fiscal year in which Laverty’s Separation from Service occurs. As used herein, a “Separation from Service” occurs when Laverty dies, retires, or otherwise has a termination of employment with the Company that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder.”

3. Section 8C of the Agreement is hereby amended and restated to read in its entirety as follows:

“C. As a condition to receiving the severance payments under Section 8B above, Laverty must execute and deliver to the Company within twenty-one (21) days following the termination of his employment (or such longer period as may be required under applicable law) 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.”

4. A new Section 12K is hereby added to the Agreement to read in its entirety as follows:

“K Section 409A.

(i) It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“Code Section 409A”) so as not to subject Laverty to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to Laverty.

(ii) Notwithstanding any provision of this Agreement to the contrary, if Laverty is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of Laverty’s Separation

from Service, Laverty shall not be entitled to any payment or benefit pursuant to Section 8B until the earlier of (i) the date which is six (6) months after Laverty’s Separation from Service for any reason other than death, or (ii) the date of Laverty’s death. Any amounts otherwise payable to Laverty upon or in the six (6) month period following Laverty’s Separation from Service that are not so paid by reason of this Section 12K(ii) shall be paid (without interest) as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after Laverty’s Separation from Service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of Laverty’s death). The provisions of this Section 12K(ii) shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Code Section 409A.

(iii) To the extent that any benefits pursuant to Section 8B(ii) or reimbursements pursuant to Section 6 or Section 12J are taxable to Laverty, any reimbursement payment due to Laverty pursuant to any such provision shall be paid to Laverty on or before the last day of Laverty’s taxable year following the taxable year in which the related expense was incurred. The benefits and reimbursements pursuant to such provisions are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that Laverty receives in one taxable year shall not affect the amount of such benefits or reimbursements that Laverty receives in any other taxable year.”

5. Except as expressly modified herein, the Agreement shall remain in full force and effect in accordance with its original terms.

6. Capitalized terms that are not defined herein shall have the meanings ascribed to them in the Agreement.

7. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered on the day and year first above written.

	FARMER BROS. CO.


	By:	/s/ John E. Simmons
	John E. Simmons
	Chief Financial Officer


	LAVERTY


	/s/ Roger M. Laverty III
	Roger M. Laverty III

Exhibit 10.15

AMENDMENT NO. 1
to
EMPLOYMENT AGREEMENT

THIS AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (this “Amendment”) is dated as of December 31, 2008, by and between Farmer Bros. Co., a Delaware corporation (the “Company”), and Drew H. Webb (“Webb”).

WHEREAS, Webb is currently employed by the Company pursuant to that certain Employment Agreement, dated as of March 3, 2008 (the “Agreement”); and

WHEREAS, the Company and Webb desire to amend the Agreement, as provided herein, to incorporate certain changes deemed advisable in light of Section 409A of the U.S. Internal Revenue Code.

NOW, THEREFORE, the parties agree as follows:

1. The last paragraph of Section 7B of the Agreement is hereby amended and restated to read in its entirety as follows:

“ “Good Reason” shall consist only of (i) the Company’s material breach of this Agreement, (ii) a material reduction in Webb’s responsibilities, duties or authority, or (iii) a material relocation of Webb’s principal place of employment more than fifty (50) miles from its present location; provided, however, that any such condition shall not constitute “Good Reason” unless both (x) Webb provides written notice to the Company describing the condition claimed to constitute Good Reason in reasonable detail within ninety (90) days of the initial existence of such condition, and (y) the Company fails to remedy such condition within thirty (30) days of receiving such written notice thereof; and provided, further, that in all events the termination of Webb’s employment with the Company shall not be treated as a termination for “Good Reason” unless such termination occurs not more than one (1) year following the initial existence of the condition claimed to constitute “Good Reason.” ”

2. Section 8B of the Agreement is hereby amended and restated to read in its entirety as follows:

“B. If termination occurs at the election of the Company without Cause or by Webb’s resignation with Good Reason: Webb will receive as severance (i) an amount equal to his base salary at the rate in effect on the date of termination for a period of one (1) year, (ii) 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 Webb’s employment not terminated) and (iii) an amount equal to one hundred percent (100%) of Webb’s Target Award for the fiscal year in which the date of termination occurs (or, if no Target Award has been assigned to Webb as of the date of termination, the average bonus paid by the Company to Webb for the last three (3) completed fiscal years or for the number of completed fiscal years that Webb has been in the employ of

the Company if fewer than three, prior to the termination date), such amount to be prorated for the partial fiscal year in which the termination occurs. Webb is not obligated to seek other employment as a condition to receipt of the payments called for by this Section 8B, and Webb’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. Subject to Section 8C and Section 12K(ii), the amount referred to in clause (i) above shall be paid in installments in accordance with the Company’s standard payroll practices commencing in the month following the month in which Webb’s Separation from Service occurs, and the amount referred to in clause (iii) above shall be paid in a lump sum within thirty (30) days after the end of the Company’s fiscal year in which Webb’s Separation from Service occurs. As used herein, a “Separation from Service” occurs when Webb dies, retires, or otherwise has a termination of employment with the Company that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder.”

3. Section 8C of the Agreement is hereby amended and restated to read in its entirety as follows:

“C. As a condition to receiving the severance payments under Section 8B above, Webb must execute and deliver to the Company within twenty-one (21) days following the termination of his employment (or such longer period as may be required under applicable law) 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.”

4. A new Section 12K is hereby added to the Agreement to read in its entirety as follows:

“K Section 409A.

(i) It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“Code Section 409A”) so as not to subject Webb to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to Webb.

(ii) Notwithstanding any provision of this Agreement to the contrary, if Webb is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of Webb’s Separation from Service, Webb shall not be entitled to any payment or benefit pursuant to

Section 8B until the earlier of (i) the date which is six (6) months after Webb’s Separation from Service for any reason other than death, or (ii) the date of Webb’s death. Any amounts otherwise payable to Webb upon or in the six (6) month period following Webb’s Separation from Service that are not so paid by reason of this Section 12K(ii) shall be paid (without interest) as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after Webb’s Separation from Service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of Webb’s death). The provisions of this Section 12K(ii) shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Code Section 409A.

(iii) To the extent that any benefits pursuant to Section 8B(ii) or reimbursements pursuant to Section 6 or Section 12J are taxable to Webb, any reimbursement payment due to Webb pursuant to any such provision shall be paid to Webb on or before the last day of Webb’s taxable year following the taxable year in which the related expense was incurred. The benefits and reimbursements pursuant to such provisions are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that Webb receives in one taxable year shall not affect the amount of such benefits or reimbursements that Webb receives in any other taxable year.”

5. Except as expressly modified herein, the Agreement shall remain in full force and effect in accordance with its original terms.

6. Capitalized terms that are not defined herein shall have the meanings ascribed to them in the Agreement.

7. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered on the day and year first above written.

	FARMER BROS. CO.


	By:	/s/ Roger M. Laverty III
	Roger M. Laverty III
	Chief Executive Officer


	WEBB


	/s/ Drew H. Webb
	Drew H. Webb

Exhibit 10.30

AMENDMENT 2008-1

TO THE

FARMER BROS. CO. AMENDED AND RESTATED

EMPLOYEE STOCK OWNERSHIP PLAN

This Amendment is hereby made and entered into this 15th day of December, 2008, by Farmer Bros. Co. (the “Employer”).

WHEREAS, the Employer adopted the Farmer Bros. Co. Amended and Restated Employee Stock Ownership Plan (the “Plan”), effective January 1, 2000; and

WHEREAS, Section 12.01 of the Plan allows the Employer the ability to amend the Plan at any time; and

WHEREAS, the Employer desires to amend the Plan to comply with certain provisions of the Pension Protection Act of 2006, as well as incorporate the requirements under the final Treasury Regulations issued pursuant to section 415 of the Internal Revenue Code (the “Code”) in order to maintain the Plan’s tax-qualified status under the Code.

NOW, THEREFORE, in consideration of the above premises, the Company hereby amends the Plan in accordance with this Amendment 2008-1, effective as stated herein:

1. Effective January 1, 2008, Section 1.11 of the Plan is amended by adding the following new language to the end of existing text thereof:

“Effective January 1, 2008, notwithstanding the preceding, for purposes of this Section 1.11, a Participant’s Compensation shall also include Post-Severance Compensation. For purposes of this Section 1.11 and the Plan, the term “Post-Severance Compensation” means the following amounts paid after an Employee’s termination date. To the extent that such amounts are paid to the Employee by the later of 2½ months after the Employee’s termination date and the end of the Limitation Year that includes the Employee’s termination date, Post-Severance Compensation includes the payment of regular compensation for services during the Employee’s regular working hours, or compensation for services outside the Employee’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments, provided that the payment would have been paid to the Employee prior to a termination date if the Employee had continued in employment with the Employer. Such Compensation shall be included during the Plan Year in which the Post-Severance Compensation is paid and not accrued.”

2. Effective January 1, 2008, Section 3.03(c) of the Plan is amended by adding the following new language to the end of existing text thereof:

“Effective January 1, 2008, notwithstanding the preceding, for purposes of this Section 3.03, a Participant’s remuneration shall also include Post-Severance Compensation. For purposes of this Section 3.03 and the Plan, the term “Post-Severance Compensation” means the following amounts paid after an Employee’s termination date. To the extent that such amounts are paid to the Employee by the later of 2½ months after the Employee’s termination date and the end of the Limitation Year that includes the Employee’s termination date, Post-Severance Compensation includes the payment of regular compensation for services during the Employee’s regular working hours, or compensation for services outside the Employee’s regular working hours (such as

overtime or shift differential), commissions, bonuses, or other similar payments, provided that the payment would have been paid to the Employee prior to a termination date if the Employee had continued in employment with the Employer. Such remuneration shall be included during the Limitation Year in which the Post-Severance Compensation is paid and not accrued.”

3. Effective January 1, 2008, Section 3.03(b) of the Plan is amended by adding the following new language to the end of existing text thereof:

“Annual additions for purposes of Code Section 415 shall not include restorative payments. A restorative payment is a payment made to restore losses to a Plan resulting from actions by a fiduciary for which there is reasonable risk of liability for breach of a fiduciary duty under ERISA or under other applicable federal or state law, where Participants who are similarly situated are treated similarly with respect to the payments. Generally, payments are restorative payments only if the payments are made in order to restore some or all of the Plan’s losses due to an action (or a failure to act) that creates a reasonable risk of liability for such a breach of fiduciary duty (other than a breach of fiduciary duty arising from failure to remit contributions to the Plan). This includes payments to the Plan made pursuant to a Department of Labor order, the Department of Labor’s Voluntary Fiduciary Correction Program, or a court-approved settlement, to restore losses to the Plan on account of the breach of fiduciary duty (other than a breach of fiduciary duty arising from failure to remit contributions to the Plan). Payments made to the Plan to make up for losses due merely to market fluctuations and other payments that are not made on account of a reasonable risk of liability for breach of a fiduciary duty under ERISA are not restorative payments and generally constitute contributions that are considered annual additions.

Annual additions for purposes of Code Section 415 of the Code shall not include: (1) The direct transfer of a benefit or employee contributions from a qualified plan to this Plan; (2) Rollover contributions (as described in Code Sections 401(a)(31), 402(c)(1), 403(a)(4), 403(b)(8), 408(d)(3), and 457(e)(16)); (3) Repayments of loans made to a Participant from the Plan; and (4) Repayments of amounts described in Code Section 411(a)(7)(B) (in accordance with Code Sections 411(a)(7)(C)) and 411(a)(3)(D) or repayment of contributions to a governmental plan (as defined in Code Section 414(d) ) as described in Code Section 415(k)(3), as well as Employer restorations of benefits that are required pursuant to such repayments.

Notwithstanding any provision of the Plan to the contrary, Annual Additions shall be determined consistent with Code Section 415 and the regulations promulgated thereunder.”

4. Effective January 1, 2008, Section 3.03(e) of the Plan is amended by adding the following new language to the end of existing text thereof:

“Notwithstanding the preceding, if for any Limitation Year the Annual Additions allocated to a Participant’s Account exceeds the maximum permissible amount as set forth in Section 8.1, then such excessive Annual Additions shall be corrected as allowed under applicable

guidance, including the Employee Plans Compliance Resolution System (“EPCRS”) that is issued by the Internal Revenue Service.”

5. Effective January 1, 2008, Section 3.03(d) of the Plan is amended by adding the following new language to the end of existing text thereof:

“The Employer may contribute under another Related Defined Contribution Plan in addition to its contributions under this Plan. If the Administrator allocated an excess amount to an Account on a date which coincides with an allocation of the other Related Defined Contribution Plan, the Administrator will attribute the total excess amount allocated as of such date to any other qualified plan maintained by the Employer unless the Administrator determines otherwise or applicable law prohibits such allocation to the other qualified plan maintained by the Employer. For purposes of applying the limitations that are applicable to a Participant for a particular Limitation Year under the provisions of this Section and Code Section 415(c), the Employer shall aggregate all Related Defined Contribution Plan in accordance with the requirements set forth in Section 1.415(f)-1 of the Regulations. “

6. Effective January 1, 2008, Section 7.10 of the Plan is amended by adding the following new language to the end of existing text thereof:

“(i) Effective January 1, 2007, the term “Eligible Rollover Distribution” means any distribution, other than a distribution described in Section 7.10(a), of all or any portion of the balance to the credit of:

(A) an Eligible Distributee, or

(B) subject to Section 7.10(a), a Beneficiary who is not the surviving spouse of the Participant, if the distribution is made in accordance with Code Section 402(c)(11).

(ii) Notwithstanding Section 7.10(a), the term “Eligible Rollover Distribution” does not include:

(A) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for:

(1) the life (or life expectancy) of the Eligible Distributee or a nonspouse Beneficiary, or the joint lives (or joint life expectancies) of the Eligible Distributee and the Eligible Distributee’s Beneficiary; or

(2) a specified period of ten (10) years or more;

(B) any distribution to the extent such distribution is required under Code Section 401(a)(9); or

(C) any hardship distribution from any qualified plan.

A portion of a distribution shall not fail to be an Eligible Rollover Distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, such

portion may be transferred only to an individual retirement account or annuity described in Code Section 408(a) or (b) or to a qualified defined contribution plan described in Code Section 401(a) or 403(a) of the Code or to an annuity contract described in Code Section 403(b) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.”

7. Effective January 1, 2008, Section 7.10(b) of the Plan is amended by adding the following new language to the end of existing text thereof:

“(i) Effective January 1, 2008, the term “Eligible Retirement Plan” means any of the following that accepts an Eligible Rollover Distribution: (i) an individual retirement account described in Code Section 408(a); (ii) an individual retirement annuity described in Code Section 408(b) (other than an endowment contract); (iii) a qualified plan described in Code Section 401(a); (iv) an annuity plan described in Code Section 403(a); (v) an annuity contract described in Code Section 403(b); (vi) an eligible deferred compensation plan described in Code Section 457(b) which is maintained by an eligible employer described in Code Section 457(b) and which agrees to separately account for amounts transferred into such plan from this Plan; or (vii) effective for distributions made after December 31, 2007, a Roth IRA described in section 408A of the Code.

(ii) Notwithstanding anything contained herein to the contrary, in the case of an Eligible Rollover Distribution to a Beneficiary who is not the Participant’s surviving spouse or a spouse or former spouse who is an Alternate Payee under a qualified domestic relations order, as defined in Code Section 414(p), an Eligible Retirement Plan only means (i) an individual retirement account described in Code Section 408(a); or (ii) an individual retirement annuity described in Code Section 408(b) (other than an endowment contract), either of which is established for the purpose of receiving the distribution on behalf of such individual as a Beneficiary of the Participant.”

IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed as of the date first written above.

	FARMER BROS. CO.


	/S/ JOHN E. SIMMONS

	By:	John E. Simmons
		(Print Name)

	Treasurer
	Title

Exhibit 10.31

GOOD FAITH AMENDMENT TO COMPLY WITH CODE SECTION 401(a)(31)(B) AS

AMENDED BY THE ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF

2001 (EGTRRA)

This amendment of the Plan is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). This amendment is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder. This amendment shall be effective as of March 28, 2005. This amendment shall continue to apply to the Plan, including the Plan as later amended, until such provisions are integrated into the Plan or the good faith compliance EGTRRA amendment provisions are specifically amended.

This amendment shall supersede any previous good faith compliance EGTRRA amendment and the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment.

Plan Name: FARMER BROS. CO. AMENDED AND RESTATED EMPLOYEE STOCK OWNERSHIP PLAN

The Plan named above gives the Employer the right to amend it at any time. According to that right, the Plan is amended as follows:

The provisions of the Plan in Section 7.06 that provide for the involuntary distribution of vested accrued benefits of $5,000 or less, are modified to reduce the $5,000 threshold to $1,000. The $5,000 threshold in such provisions is reduced to $1,000 and the value of the Participant’s interest in the Plan for such purpose shall include any rollover contributions (and earnings thereon) within the meaning of Code Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16). Any such involuntary distribution of vested accrued benefits shall be made in cash.

This amendment is made an integral part of the aforesaid Plan and is controlling over the terms of said Plan with respect to the particular items addressed expressly herein. All other provisions of the Plan remain unchanged and controlling.

Signing this amendment, the Employer, as plan sponsor, has made the decision to adopt this plan amendment. The Employer is acting in reliance on its own discretion and on the legal and tax advice of its own advisors, and not that of any member of the Principal Financial Group or any representative of a member company of the Principal Financial Group.

Signed this 15th day of December, 2008

	FARMER BROS. CO.

	/S/ JOHN E. SIMMONS

	By	John E. Simmons
		(Print Name)


		Title

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Roger M. Laverty III, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Farmer Bros. Co.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 5, 2009

	/s/ Roger M. Laverty III

	Roger M. Laverty III
	President and Chief Executive Officer
	(Principal Executive Officer)

Exhibit 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John E. Simmons, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Farmer Bros. Co.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 5, 2009

	/s/ John E. Simmons

	John E. Simmons
	Treasurer and Chief Financial Officer
	(Principal Financial and Accounting Officer)

Exhibit 32.1

Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Farmer Bros. Co. (the “Company”) on Form 10-Q for the fiscal quarter ended December 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Roger M. Laverty III, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 5, 2009

	/s/ Roger M. Laverty III

	Roger M. Laverty III
	President and Chief Executive Officer
	(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Farmer Bros. Co. (the “Company”) on Form 10-Q for the fiscal quarter ended December 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John E. Simmons, Treasurer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a)or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 5, 2009

	/s/ John E. Simmons

	John E. Simmons
	Treasurer and Chief Financial Officer
	(Principal Financial and Accounting Officer)