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Farmer Brothers Co. (NASDAQ:FARM) has entered into a significant agreement with investment entity 22NW, LP. According to a Form 8-K filed with the Securities and Exchange Commission on August 16, 2024, the company will appoint an observer to its Board of Directors, effective from Monday, August 19, 2024. The initial observer, named as Mr. Bryson O. Hirai-Hadley, will not hold director status nor possess voting rights on board matters.
The agreement with 22NW, which encompasses entities such as 22NW Fund, LP, and 22NW Fund GP, LLC, includes several standstill provisions. Notably, 22NW is restricted from owning more than 15% of Farmer Brothers' common stock and is prohibited from engaging in actions such as soliciting proxies or seeking to influence the election or removal of directors against the Board's recommendations.
Furthermore, 22NW has committed to voting its shares in support of the Board's recommendations at shareholder meetings, with certain exceptions for extraordinary transactions and instances where proxy advisory firms Institutional Shareholder Services Inc. and Glass, Lewis & Co., LLC diverge from the Board's guidance.
The agreement also stipulates mutual non-disparagement terms and a confidentiality clause in connection with the observer role. These provisions aim to maintain a cooperative relationship between Farmer Brothers and 22NW.
The details of this agreement were made public through the filing of Exhibit 10.1 attached to the Form 8-K, which provides a comprehensive view of the terms between Farmer Brothers and 22NW. This latest move is part of Farmer Brothers' ongoing efforts to enhance its corporate governance and shareholder relations.
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