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STOCK PURCHASE AGREEMENT
Dated as of November 20, 1997
among
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
FUND AMERICAN ENTERPRISES, INC.
WHITE MOUNTAINS INSURANCE COMPANY
and
XXXXX XXXXXX INC.
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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
Xxxxx Xxxxxx Inc., a Delaware corporation ("Xxxxx Xxxxxx").
WHEREAS, Sellers are the beneficial holders of an aggregate of
10,994,876 units of beneficial interest ("Units") of San Xxxx 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 Xxxxx Xxxxxx 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 Xxxxx
Xxxxxx, and Xxxxx Xxxxxx 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 Xxxxx Xxxxxx 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
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
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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 Xxxxx
Xxxxxx pursuant to this Agreement, prior to the expiration of 90 days from the
effective date of this Agreement, without the prior written consent of Xxxxx
Xxxxxx.
3. DELIVERY OF THE PURCHASED UNITS AND PAYMENT THEREFOR.
(a) Delivery to Xxxxx Xxxxxx of and payment for the Purchased Units
shall be made at the office of Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000, 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
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the Closing Date may be varied by agreement among the Sellers and Xxxxx Xxxxxx.
(b) The Purchased Units to be purchased hereunder shall be delivered
to Xxxxx Xxxxxx on the Closing Date by delivery of certificates or by delivery
through the facilities of The Depository Trust Company to an account designated
by Xxxxx Xxxxxx 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 XXXXX XXXXXX.
(a) It shall be a condition to Xxxxx 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)
Xxxxx Xxxxxx shall have received, on or prior to the Closing Date, an opinion of
Cravath, Swaine & Xxxxx, special counsel to the Sellers, in the form attached
hereto as Exhibit A.
(b) It shall be a condition to Xxxxx 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 Xxxxx Xxxxxx, 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
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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 Xxxxx Xxxxxx, 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
Xxxxx Xxxxxx or any Indemnified Party is an actual or potential party to such
Proceeding), unless such settlement, compromise or consent includes an
unconditional release of Xxxxx Xxxxxx 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 Xxxxx Xxxxxx 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,
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telegraph, telex or by facsimile:
If to Xxxxx Xxxxxx:
Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to any of the Sellers:
Fund American Enterprises Holdings Inc.
00 Xxxxx Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Attention: Secretary
Telephone: (000)000-0000
Telecopier: (000)000-0000
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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
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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 Xxxxx Xxxxxx will
issue any press release or public announcement of the transactions contemplated
hereby except (i) as FAE Holdings and Xxxxx Xxxxxx 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
Xxxxx Barney's absolute discretion, without liability on the part of Xxxxx
Xxxxxx 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 Xxxxx 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.
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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/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President and
Controller
FUND AMERICAN ENTERPRISES, INC.
By:/s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: President
WHITE MOUNTAINS INSURANCE COMPANY
By:/s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President and
Controller
XXXXX XXXXXX INC.
By:/s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Managing Director
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SCHEDULE I
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UNITS
BENEFICIALLY PURCHASED
ENTITY OWNED UNITS
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Fund American
Enterprises
Holdings, 157,215 157,215
Inc.
(a Delaware
corporation)
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Fund American
Enterprises,
Inc.
(a Delaware
corporation) 10,759,876 4,765,000
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White
Mountains
Insurance
Company
(a Delaware
corporation) 77,785 77,785
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TOTAL: 10,994,876 5,000,000
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