<PAGE>
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 8)
San Juan Basin Royalty Trust
----------------------------
(Name of Issuer)
Units of Beneficial Interest
----------------------------
(Title of Class of Securities)
798241105
----------------------------
(CUSIP Number)
Michael S. Paquette
Vice President and
Controller
Fund American Enterprises Holdings, Inc.
80 South Main Street
Hanover, NH 03755
(603) 640-2205
----------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 20, 1997
----------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box ___.
Check the following box if a fee is being paid with this statement ___.
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class. (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
Page 1
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CUSIP NO. 79 8241105
- ---------------------------------------------------------------------------
(1) Name of Reporting Person. S.S. or I.R.S. Identification No. of Above
Person
Fund American Enterprises Holdings, Inc. ("FAEH")
94-2708455
- ---------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member (a)
of a Group (See Instructions) ------------------
-------------------- (b) ------------------
(3) (SEC Use Only)
- ---------------------------------------------------------------------------
(4) Source of Funds (See Instructions)
- ---------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e)
- ---------------------------------------------------------------------------
(6) Citizenship or Place
of Organization Delaware
- ---------------------------------------------------------------------------
Number of Shares (7) Sole Voting Power
Beneficially Owned
by Each Reporting -----------------------------
Person With
(8) Shared Voting Power
5,994,876 Units of Beneficial
Interest ("Units")
-----------------------------
(9) Sole Dispositive Power
-----------------------------
(10) Shared Dispositive Power
5,994,876 Units
-----------------------------
- ---------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
5,994,876 Units
- ---------------------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
- ---------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
Approximately 14.4%
- ---------------------------------------------------------------------------
(14) Type of Reporting Person (See Instructions) HC, CO
- ---------------------------------------------------------------------------
Page 2
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CUSIP NO. 79 8241105
- ---------------------------------------------------------------------------
(1) Name of Reporting Person. S.S. or I.R.S. Identification No. of Above
Person
Fund American Enterprises, Inc. ("FAE")
04-3357154
- ---------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member (a)
of a Group (See Instructions) ------------------
-------------------- (b) ------------------
(3) (SEC Use Only)
- ---------------------------------------------------------------------------
(4) Source of Funds (See Instructions)
- ---------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e)
- ---------------------------------------------------------------------------
(6) Citizenship or Place
of Organization Delaware
- ---------------------------------------------------------------------------
Number of Shares (7) Sole Voting Power
Beneficially Owned
by Each Reporting -----------------------------
Person With
(8) Shared Voting Power
5,994,876 Units
-----------------------------
(9) Sole Dispositive Power
-----------------------------
(10) Shared Dispositive Power
5,994,876 Units
-----------------------------
- ---------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
5,994,876 Units
- ---------------------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
- ---------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
Approximately 14.4%
- ---------------------------------------------------------------------------
(14) Type of Reporting Person (See Instructions) HC, CO
- ---------------------------------------------------------------------------
Page 3
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CUSIP NO. 79 8241105
- ---------------------------------------------------------------------------
(1) Name of Reporting Person. S.S. or I.R.S. Identification No. of Above
Person
White Mountains Insurance Company ("WMIC")
02-0478119
- ---------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member (a)
of a Group (See Instructions) ------------------
-------------------- (b) ------------------
(3) (SEC Use Only)
- ---------------------------------------------------------------------------
(4) Source of Funds (See Instructions)
- ---------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e)
- ---------------------------------------------------------------------------
(6) Citizenship or Place
of Organization Delaware
- ---------------------------------------------------------------------------
Number of Shares (7) Sole Voting Power
Beneficially Owned
by Each Reporting -----------------------------
Person With
(8) Shared Voting Power
-----------------------------
(9) Sole Dispositive Power
-----------------------------
(10) Shared Dispositive Power
-----------------------------
- ---------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
- ---------------------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
- ---------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
- ---------------------------------------------------------------------------
(14) Type of Reporting Person (See Instructions) HC, CO
- ---------------------------------------------------------------------------
Page 4
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5
ONLY ITEMS REPORTED IN THIS AMENDMENT NO. 8 TO SCHEDULE 13D ARE AMENDED FROM
THE FILING ON SCHEDULE 13D DATED DECEMBER 28, 1990 (THE "SCHEDULE 13D"), AS
AMENDED BY AMENDMENT NO. 1 DATED FEBRUARY 13, 1992, AMENDMENT NO. 2 DATED
NOVEMBER 6, 1992, AMENDMENT NO. 3 DATED APRIL 27, 1993, AMENDMENT NO. 4 DATED
JUNE 23, 1993, AMENDMENT NO. 5 DATED JULY 7, 1993, AMENDMENT NO. 6 DATED
SEPTEMBER 2, 1993, AND AMENDMENT NO. 7 DATED DECEMBER 23, 1993. ALL OTHER
ITEMS REMAIN UNCHANGED. UNLESS OTHERWISE SPECIFIED, ALL DEFINED TERMS USED
HEREIN HAVE THE MEANING PREVIOUSLY ASCRIBED TO THEM IN THE SCHEDULE 13D.
Item 4. PURPOSES OF TRANSACTION.
Consistent with FAEH's current strategy to redeploy its passive
investment portfolio into operating businesses (or to pursue other
opportunities) and in light of current market conditions, FAEH has determined
to reduce its current position in the Units and, on November 20, 1997,
entered into an agreement (the "Purchase Agreement") to sell 5,000,000 Units
for net proceeds of $9.25 per Unit to Smith Barney Inc. ("Smith Barney").
The Purchase Agreement prohibits FAEH, FAE and WMIC from disposing of any
additional Units for 90 days. Subject to the foregoing, FAEH will continue
to hold the remainder of its Units for investment purposes. FAEH reserves
the right to sell all or a portion of its remaining Units, subject to the
contractual restrictions previously mentioned, at any time and from time to
time depending upon market conditions and other factors affecting FAEH's
evaluation of the value of the Units or its alternative uses of the proceeds
from additional sales of the Units.
A copy of the Purchase Agreement is filed as Exhibit (c)(1) hereto
and is incorporated herein by reference.
Page 5
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Item 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is hereby replaced in its entirety:
(a) & (b) The aggregate number of Units and the percentage of the
outstanding Units owned by the indicated persons named in Item 2 is as follows:
UNITS PERCENTAGE
BENEFICIALLY OF UNITS
PERSON OWNED BENEFICIALLY OWNED
------ ------------- -------------------
FAEH 5,994,876 14.4%
FAE 5,994,876 14.4%
FAEH shares voting power and dispositive power with FAE with
respect to the 5,994,876 Units it holds indirectly through FAE.
Neither Mr. Arthur Zankel, a director of FAEH, nor First Manhattan
Co., a partnership in which Mr. Zankel is a general partner, directly owns
any Units. Other partners in First Manhattan Co. directly own 11,500 Units.
Mr. Arthur Zankel does not have specific discretionary authority over any
Units owned by First Manhattan's clients. The partners of First Manhattan
Co. (including Mr. Zankel) have non-specific discretionary authority over
114,100 Units owned by First Manhattan Co.'s clients.
Other than as set forth above, neither FAEH or FAE, nor, to the
best knowledge of FAEH or FAE, any other persons named in Item 2 beneficially
owns any Units.
(c) Other than as set forth in Item 4, there have
been no transactions by FAEH, FAE or WMIC, or to the knowledge of FAEH, FAE
or WMIC, any of the persons listed on Schedule I attached hereto, in Units
effected during the past 60 days.
(d) None
(e) Not Applicable
Page 6
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Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Item 6 is hereby replaced in its entirety.
The response to Item 4 is incorporated herein by reference.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 is hereby amended by adding the following new Exhibit.
(c)(1) Purchase Agreement.
Page 7
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SIGNATURE
After reasonable inquiry and to the best of the knowledge and belief of
the undersigned, the undersigned certifies that the information set forth in
this statement is true, complete and correct.
Dated: November 21, 1997
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
BY: /s/ Michael S. Paquette
------------------------------------
Name: Michael S. Paquette
Title: Vice President and Controller
FUND AMERICAN ENTERPRISES, INC.
BY: /s/ James H. Ozanne
------------------------------------
Name: James H. Ozanne
Title: President
WHITE MOUNTAINS INSURANCE COMPANY
BY: /s/ Michael S. Paquette
------------------------------------
Name: Michael S. Paquette
Title: Vice President and Controller
Page 8
<PAGE>
SCHEDULE I TO SCHEDULE 13D
The following is a list of the directors and executive officers of Fund
American Enterprises Holdings, Inc. ("FAEH"), Fund American Enterprises, Inc.
("FAE"), and White Mountains Insurance Company ("WMIC") setting forth the
business address and present principal occupation or employment (and the
name, principal business and address of any corporation or organization in
which such employment is conducted) of each such person. Each such person is
a citizen of the United States of America.
NAME AND PRESENT PRINCIPAL
BUSINESS ADDRESS OFFICE OCCUPATION OR EMPLOYMENT
- ----------------- ------ -------------------------
FAEH
Raymond Barrette Executive Vice President Executive Vice President
and Chief Financial and Chief Financial
Officer of FAEH Officer of FAEH and
Chief Financial Officer
of White Mountains
Holdings, Inc.
Dennis P. Beaulieu Vice President & Vice President &
Fund American Secretary of FAEH, Secretary of FAEH,
Enterprises Chief Financial Chief Financial
Holdings, Inc. Officer and Director Officer of WMIC
80 South Main Street of WMIC
Hanover, NH 03755
John J. Byrne Chairman of the Board, Nonexecutive Chairman of
Fund American President and Chief the Board of FAEH
Enterprises Executive Officer of
Holdings, Inc. FAEH, Chairman of the
80 South Main Street Board of FAE
Hanover, NH 03755
Patrick M. Byrne Director of FAEH and Chief Executive
Centricut, LLC WMIC of Centricut, LLC
2 Technology Drive,
STE 3
West Lebanon, NH 03784
Reid T. Campbell Assistant Controller Assistant Controller
Fund American of FAEH and Director of FAEH
Enterprises of WMIC
Holdings, Inc.
80 South Main Street
Hanover, NH 03755
Howard L. Clark Director of FAEH Retired
200 Park Avenue,
Suite 4501
New York, NY 10166
Howard L. Clark, Jr. Director of FAEH Vice Chairman of Lehman
Lehman Brothers Inc. Brothers Inc.
American Express Tower
New York, NY 10128
S-1
<PAGE>
SCHEDULE I TO SCHEDULE 13D
(cont.)
NAME AND PRESENT PRINCIPAL
BUSINESS ADDRESS OFFICE OCCUPATION OR EMPLOYMENT
- ----------------- ------ -------------------------
Robert P. Cochran Director of FAEH President & Chief
Financial Security Executive Officer of
Assurance Financial Security
Holdings Ltd. Assurance Holdings Ltd.
350 Park Avenue
New York, NY 10022
George J. Gillespie, III Director of FAEH Partner in Cravath,
Cravath, Swaine & Swaine & Moore
Moore
825 Eighth Avenue
New York, NY 10019
K. Thomas Kemp President, Chief Executive President and Chief
Fund American Officer & Director of FAEH, Executive Officer of
Enterprises Director of FAE, Chairman of FAEH
Holdings, Inc. the Board of WMIC
80 South Main Street
Hanover, NH 03755
Gordon S. Macklin Director of FAEH Chairman of the
8212 Burning Tree Board of White
Road River Corporation
Bethesda, MD 20817
Frank A. Olson Director of FAEH Chairman of the
The Hertz Board & Chief
Corporation Executive Officer of
225 Brae Boulevard The Hertz
Park Ridge, NJ 07656 Corporation
Michael S. Paquette Vice President & Controller Vice President &
Fund American of FAEH and WMIC Controller of FAEH
Enterprises Director of FAE and WMIC
Holdings, Inc.
80 South Main Street
Hanover, NH 03755
David G. Staples Vice President & Director Vice President &
Fund American of Taxation of FAEH Director of Taxation
Enterprises of FAEH
Holdings, Inc.
80 South Main Street
Hanover, NH 03755
Arthur Zankel Director of FAEH Co-Managing Partner
First Manhattan Co. First Manhattan Co.
437 Madison Ave.
New York, NY 10022
S-2
<PAGE>
SCHEDULE I TO SCHEDULE 13D
(cont.)
NAME AND PRESENT PRINCIPAL
BUSINESS ADDRESS OFFICE OCCUPATION OR EMPLOYMENT
- ----------------- ------ -------------------------
FAE
John J. Byrne (see above) (see above)
(see above)
Terry L. Baxter Director of FAE President of White
White Mountains Mountains Holdings,
Holdings, Inc. Inc.
80 South Main Street
Hanover, NH 03755
K. Thomas Kemp (see above) (see above)
(see above)
James H. Ozanne President and Director President of FAE
Fund American of FAE
Enterprises, Inc.
The 1820 House,
Main Street
Norwich, VT 05055
Michael S. Paquette (see above) (see above)
(see above)
Robert E. Snyder Secretary & Controller of Secretary and
Fund American FAE Controller of
Enterprises, Inc. FAE
The 1820 House, Main
Street
Norwich, VT 05055
S-3
<PAGE>
SCHEDULE I TO SCHEDULE 13D
(cont.)
NAME AND PRESENT PRINCIPAL
BUSINESS ADDRESS OFFICE OCCUPATION OR EMPLOYMENT
- ----------------- ------ -------------------------
WMIC
Terry L. Baxter (see above) (see above)
(see above)
Dennis P. Beaulieu (see above) (see above)
(see above)
Patrick M. Byrne (see above) (see above)
(see above)
Reid T. Campbell (see above) (see above)
(see above)
Morgan Davis President, Chief President and Chief
80 South Main Street Executive Officer and Executive
Hanover, NH 03755 Director of WMIC Officer of WMIC
K. Thomas Kemp (see above) (see above)
(see above)
Michael S. Paquette (see above) (see above)
(see above)
S-4
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. NAME OF EXHIBIT PAGE NO.
- ----------- --------------- --------
(c)(1) Purchase Agreement
<PAGE>
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
Dated as of November 20, 1997
among
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
FUND AMERICAN ENTERPRISES, INC.
WHITE MOUNTAINS INSURANCE COMPANY
and
SMITH BARNEY INC.
- --------------------------------------------------------------------------------
<PAGE>
THIS STOCK PURCHASE AGREEMENT, dated as of November 20, 1997 (the
"Agreement"), is among Fund American Enterprises Holdings, Inc., a Delaware
corporation ("FAE Holdings"), Fund American Enterprises, Inc., a Delaware
corporation ("FAE"), White Mountains Insurance Company, a Delaware corporation
("White Mountains" and, together with FAE Holdings and FAE, the "Sellers"), and
Smith Barney Inc., a Delaware corporation ("Smith Barney").
WHEREAS, Sellers are the beneficial holders of an aggregate of
10,994,876 units of beneficial interest ("Units") of San Juan Basin Royalty
Trust, an express trust created under the laws of the state of Texas (the
"Trust"), as set forth in Schedule I hereto;
WHEREAS, Sellers desire to sell and Smith Barney desires to purchase
5,000,000 Units (the "Purchased Units");
NOW, THEREFORE, it is hereby agreed as follows:
1. PURCHASE AND SALE OF UNITS.
Sellers hereby agree to sell, convey, transfer and deliver to Smith
Barney, and Smith Barney hereby agrees to purchase from each Seller, the
Purchased Units as set forth on Schedule I hereto at a purchase price of $9.25
per Purchased Unit (the "purchase price per unit").
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS. Each of
the Sellers hereby represents, warrants and covenants to Smith Barney as to
itself as follows:
(a) ORGANIZATION AND GOOD STANDING. Each Seller is a corporation
duly organized and validly existing under the laws of the State of Delaware.
(b) TITLE TO PURCHASED UNITS. Each Seller is the beneficial owner of
the Purchased Units being sold by such Seller pursuant to this Agreement as set
forth on Schedule I hereto and such Purchased Units are free and clear of any
claim, lien, pledge, option, charge, security interest or encumbrance of any
nature whatsoever (collectively "Encumbrances"). All of such Purchased Units
were acquired by the Sellers in open market transactions, the last of which
occurred in June 1989.
(c) AUTHORITY; EXECUTION AND DELIVERY, ETC. Each Seller has full
power and authority to enter into this Agreement and to sell the Purchased Units
being sold by such Seller in accordance with the terms hereof. The execution,
delivery and performance of this Agreement has been duly authorized by each
Seller and no other actions on the part of any of the Sellers is required to
consummate the
<PAGE>
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each Seller and constitutes the legal, valid and binding obligation
of each Seller, enforceable against it in accordance with its terms.
(d) CONSENTS, NO CONFLICTS, ETC. None of the execution and delivery
of this Agreement, the consummation by the Sellers of this Agreement, or
compliance by each of the Sellers with any of the provisions hereof will (with
or without the giving of notice or the passage of time) (i) violate or conflict
with any provision of the charter, by-laws or other organizational documents of
any of the Sellers or any agreement, instrument, judgment, decree, statute or
regulation applicable to any of the Sellers or any assets or properties of any
of the Sellers, (ii) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to any of the Sellers or any of the assets or
properties of any of the Sellers or (iii) require the consent, approval,
permission or other authorization of or by, or designation, declaration, filing,
registration or qualification with, any court, arbitrator or governmental,
administrative or self-regulatory authority or any other third party whatsoever.
(e) LITIGATION. There is no litigation, proceeding, labor dispute,
arbitral action or government investigation pending or, so far as known to any
of the Sellers, threatened against any of the Sellers with respect to the
Purchased Units or this Agreement which if adversely determined could prohibit
or prevent such Seller from consummating the transactions contemplated hereby.
There are no decrees, injunctions or orders of any court or governmental
department or agency outstanding against any of the Sellers with respect to the
Purchased Units.
(f) OWNERSHIP INTERESTS IN SELLERS; SELLERS' OWNERSHIP INTEREST IN
OTHER PARTIES; ETC. (i) None of the Sellers has an ownership interest in Bank
One, Texas, a banking association organized under the laws of the United States,
trustee under the Royalty Trust Indenture dated as of November 1, 1980 relating
to the Trust (the "Trustee") and, to the knowledge of each Seller, the Trustee
has no ownership interest in any of the Sellers; (ii) none of the Sellers has an
ownership interest in Burlington Resources Oil and Gas Company (as successor to
Southland Royalty Company, the "Operator") and, to the knowledge of each Seller,
the Operator has no ownership interest in any of the Sellers; (iii) no holder
(other than another Seller) with publicly disclosed beneficial ownership of
greater than five percent of the Units is a holder with publicly disclosed
beneficial ownership of greater than five percent of the common stock of any of
the Sellers; (iv) none of the Sellers and the Trustee and none of the Sellers
and the Operator, respectively, have common officers or directors; (v) past
2
<PAGE>
suggestions made by or in behalf of the Sellers to the Trustee that it should
provide all holders of Units additional information regarding the Trust and the
performance of the net overriding royalty interest conveyed by Southland Royalty
Company to the Trust have not been adopted; (vi) the Trustee has stated to
representatives of the Sellers that it would only file a registration statement
for a distribution of Sellers' Units if the Trustee concluded, based on
independent professional advice, that such filing would not have an adverse
impact on other holders of Units; (vii) none of the Sellers has any relationship
or understanding with any holder of Units (including Capital Guardian Trust
Company, FMR Corp. or Societe Generale Asset Management, the other holders with
publicly disclosed beneficial ownership of greater than five percent of the
Units) or with the Trustee with respect to control of the Trust; (viii) none of
Sellers controls, is controlled by, or is under common control with the Trust,
the Trustee or the Operator, and none of the Sellers is an "affiliate" of the
Trust, the Trustee or the Operator for purposes of the Securities Act of 1933
(the "Act") and (ix) it is not necessary to register the sale of the Purchased
Units by the Sellers pursuant to this Agreement under Section 5 of the Act.
(g) NO PLEDGE; OTHER ACTIONS. Each Seller agrees that prior to the
Closing Date it will not (i) sell, transfer, pledge, hypothecate or otherwise
dispose of or create any Encumbrances on the Purchased Units or make any
agreement or commitment to do any of the foregoing, (ii) take or omit to take
any action which would have the effect of preventing or disabling any Seller
from performing its obligations under this Agreement or (iii) take any action
which would make any of the representations and warranties contained in this
Agreement untrue in any material respect.
(h) RESTRICTIONS ON SALE. Each Seller agrees that it will not sell,
contract to sell, or otherwise dispose of any Units, or securities convertible
or exchangeable for Units, except for the sale of the Purchased Units to Smith
Barney pursuant to this Agreement, prior to the expiration of 90 days from the
effective date of this Agreement, without the prior written consent of Smith
Barney.
3. DELIVERY OF THE PURCHASED UNITS AND PAYMENT THEREFOR.
(a) Delivery to Smith Barney of and payment for the Purchased Units
shall be made at the office of Smith Barney Inc., 388 Greenwich Street, New
York, NY 10013, at 9:00 A.M., New York City time, on November 25, 1997 (the
"Closing Date"). The place of the closing for the Purchased Units and
3
<PAGE>
the Closing Date may be varied by agreement among the Sellers and Smith Barney.
(b) The Purchased Units to be purchased hereunder shall be delivered
to Smith Barney on the Closing Date by delivery of certificates or by delivery
through the facilities of The Depository Trust Company to an account designated
by Smith Barney in advance of the closing, in each case free and clear of
Encumbrances and with no restrictive legends of any type, against payment of the
purchase price therefor in immediately available funds.
4. CONDITIONS TO THE OBLIGATIONS OF SMITH BARNEY.
(a) It shall be a condition to Smith Barney's obligation to purchase
the Purchased Units at the Closing Date that (i) the representations and
warranties of each of the Sellers shall be true and correct in all material
respects on the Closing Date, (ii) each of the Sellers shall have performed in
all respects its agreements contained in this Agreement required to be performed
on or prior to the Closing Date, (iii) there is not in effect at the time any
preliminary or permanent injunction or other order by any court or governmental
authority having jurisdiction, or any law or regulation, which prevents or
restrains the purchase or sale and delivery of the Purchased Units and (iv)
Smith Barney shall have received, on or prior to the Closing Date, an opinion of
Cravath, Swaine & Moore, special counsel to the Sellers, in the form attached
hereto as Exhibit A.
(b) It shall be a condition to Smith Barney's obligation to purchase
the Purchased Units at the Closing Date that subsequent to the effective date of
this Agreement, there shall not have occurred any change, or any development
involving a prospective change, in or affecting the condition (financial or
other), business, properties, net worth, or results of operations of the Trust
which would materially adversely affect the market for the Units.
5. INDEMNIFICATION.
(a) The Sellers, jointly and severally, agree to indemnify and hold
harmless Smith Barney, its affiliates and their respective officers, directors,
employees, agents and controlling persons (collectively, the "Indemnified
Parties"), from and against any losses, claims, damages and liabilities, joint
or several, resulting from any breach of a representation or warranty of any of
the Sellers or the nonfulfillment of any agreement, covenant or obligation of
any of the Sellers under this Agreement and will promptly reimburse the
Indemnified Parties for all expenses (including fees and expenses of legal
counsel) as incurred in connection
4
<PAGE>
with the investigation of, preparation for or defense of any pending or
threatened claim related to such indemnity, or any action or proceeding arising
therefrom (collectively, "Proceedings"), whether or not such Indemnified Party
is a formal party to any such Proceeding. Each Seller further agrees that it
will not, without the prior written consent of Smith Barney, settle, compromise
or consent to the entry of any judgment in any pending or threatened Proceeding
in respect of which indemnification may be sought hereunder (whether or not
Smith Barney or any Indemnified Party is an actual or potential party to such
Proceeding), unless such settlement, compromise or consent includes an
unconditional release of Smith Barney and each other Indemnified Party hereunder
from all liability arising out of such Proceeding.
(b) Each of the Sellers agrees that if any indemnification or
reimbursement sought pursuant to this Agreement were for any reason not to be
available to any Indemnified Party or insufficient to hold it harmless as and to
the extent contemplated by this Agreement, then the Sellers shall contribute to
the amount paid or payable by such Indemnified Party in respect of losses,
claims, damages and liabilities in such proportion as is appropriate to reflect
the relative benefits to the Sellers on the one hand, and Smith Barney on the
other, in connection with the matters to which such indemnification or
reimbursement relates or, if such allocation is not permitted by applicable law,
not only such relative benefits but also the relative faults of such parties as
well as any other equitable considerations.
6. MISCELLANEOUS.
(a) EXPENSES. Each party shall be liable for its own expenses in
connection with the transactions contemplated by this Agreement.
(b) AMENDMENTS, ETC. All amendments or waivers of any provisions of
this Agreement may only be made pursuant to a written instrument executed by the
parties hereto or their successors and assigns.
(c) SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the successors and assigns of such party; PROVIDED,
HOWEVER, that no party hereto may assign any of its rights or obligations under
this Agreement without the written consent of the other parties hereto.
(d) NOTICES. All notices, requests and other communications provided
for hereunder shall be effective upon receipt, shall be in writing and shall be
deemed to have been duly given if delivered in person or by courier,
5
<PAGE>
telegraph, telex or by facsimile:
If to Smith Barney:
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Attention: Stephen Bujno
Telephone: (212) 723-4805
Telecopier: (212) 723-8870
with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Attention: Morton A. Pierce, Esq.
Telephone: (212) 259-6640
Telecopier: (212) 259-6333
If to any of the Sellers:
Fund American Enterprises Holdings Inc.
80 South Main Street
Hanover, New Hampshire 03755
Attention: Secretary
Telephone: (603)643-1567
Telecopier: (603)643-4562
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019-7475
Attention: Philip Gelston, Esq.
Telephone: (212) 474-1548
Telecopier: (212) 474-3700
or to such other address with respect to any party as such party shall notify
the others in writing.
(e) GOVERNING LAW AND JURISDICTION. This Agreement shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of New York (without regard to the choice
of law provisions thereof).
(f) HEADINGS. The descriptive headings of the several paragraphs of
this Agreement are inserted for
6
<PAGE>
convenience only and do not constitute a part of this Agreement.
(g) COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
(h) PUBLIC ANNOUNCEMENTS. None of the Sellers or Smith Barney will
issue any press release or public announcement of the transactions contemplated
hereby except (i) as FAE Holdings and Smith Barney may mutually agree in writing
or (ii) as may be required in the opinion of counsel under applicable law in
which case the party so required to make such an announcement shall provide the
other parties reasonable opportunity to review the proposed announcement prior
to the date of such announcement (unless it is unlawful or impracticable to do
so).
(i) COMPLETE AGREEMENT. This Agreement contains the entire agreement
among the parties with respect to the subject matter hereof and, except as
provided herein, supersedes all previous negotiations, commitments and writings.
This Agreement is not intended to confer any benefit upon any person other than
the parties hereto.
(j) TERMINATION. This Agreement shall be subject to termination in
Smith Barney's absolute discretion, without liability on the part of Smith
Barney to any of the Sellers, by notice to the Sellers, if prior to the Closing
Date (i) trading in securities generally on the New York Stock Exchange,
American Stock Exchange or the Nasdaq National Market shall have been suspended
or materially limited, (ii) a general moratorium on commercial banking
activities in New York or Texas shall have been declared by either federal or
state authorities, or (iii) there shall have occurred any outbreak or escalation
of hostilities or other international or domestic calamity, crisis or change in
political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in Smith Barney's
judgment, impracticable or inadvisable to commence or continue the purchase of
the Purchased Units. Notice of such termination may be given to the Sellers by
telegram, telecopy or telephone and shall be subsequently confirmed by letter.
7
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
By:/s/ Michael S. Paquette
-------------------------------
Name: Michael S. Paquette
Title: Vice President and
Controller
FUND AMERICAN ENTERPRISES, INC.
By:/s/ James H. Ozanne
-------------------------------
Name: James H. Ozanne
Title: President
WHITE MOUNTAINS INSURANCE COMPANY
By:/s/ Michael S. Paquette
-------------------------------
Name: Michael S. Paquette
Title: Vice President and
Controller
SMITH BARNEY INC.
By:/s/ James C. Cowles
-------------------------------
Name: James C. Cowles
Title: Managing Director
8
<PAGE>
SCHEDULE I
- --------------------------------------------------------------------------------
UNITS
BENEFICIALLY PURCHASED
ENTITY OWNED UNITS
- --------------------------------------------------------------------------------
Fund American
Enterprises
Holdings, 157,215 157,215
Inc.
(a Delaware
corporation)
- --------------------------------------------------------------------------------
Fund American
Enterprises,
Inc.
(a Delaware
corporation) 10,759,876 4,765,000
- --------------------------------------------------------------------------------
White
Mountains
Insurance
Company
(a Delaware
corporation) 77,785 77,785
- --------------------------------------------------------------------------------
TOTAL: 10,994,876 5,000,000
- --------------------------------------------------------------------------------
9
